More proof that pay TV should take Netflix, instant streaming seriously

Researchers have fallen in love with Netflix, though not for its content selection. Instead they’ve kept busy poking and prodding U.S. consumers to discern the instant streaming company’s impact on their monthly home entertainment bills. That is, if Netflix subscriptions have actually lead to spending cuts on traditional pay television services. One firm concluded they have, and that the trend could continue.

In a blog post titled “Less cable, more broadband,” the research group Parks Associates published revealing figures culled from a huge study into cord-cutting.

According to the study – which included nearly 4 million U.S. residents who view some form of Internet-based video on a regular basis – instant streaming is becoming a greater convenience to some, while pay TV a pricey nuisance. The Texas-based firm found that 13 percent of broadband users have done some degree of cord-cutting over the last year, and that by 2012 nine percent more will follow suit.

The propagation of broadband has also led to a boost for Netflix said Parks, which declared that 22 percent of high-speed broadband customers subscribe to the company’s Instant Streaming service. TV Everywhere, a tool employed by cable companies to verify paying customers and allow them access to TV content online, found controversy earlier this month. Now, the analysts have dubbed it “an ineffective retention tool” for pay TV customers. However, they believe the authentication system could make inroads with leery consumers should companies offer no-frills options.

Parks also pointed out that a growth spurt in sales of connected devices (through 2015, it believes 350 million Internet-ready TVs and game consoles will be purchased) means more people will need to pick and choose how they spend their home entertainment dollars. Game systems like the Xbox 360, Nintendo Wii and PlayStation 3 all currently feature Netflix support, and it’s a safe bet that their successors will do the same. Nintendo’s handheld 3DS received a Netflix app in July.

The battle between instant streaming services and TV companies will undoubtedly continue, though some have argued against sounding a death knell for pay TV.

In July, ABI Research found most people were content paying for TV since it offered “the best means to get the widest range of content,” though recommended pay TV companies not become complacent. Just this month IHS iSuppli said companies have “no cause for panic” when it came to Netflix and Hulu, citing a relatively small figure tied to online streaming by 2015 when compared to traditional home entertainment options. (via Home Media Magazine)