Due to the constant rise of the cost of living, consumers are cutting back on expenses. They compare prices and choose the most for less. This goes for their entertainment as well.
According to a research study done in March 2011 by The Diffusion Group TDG, the number of Netflix subscribers that are more likely to downgrade their service from a higher service tier to a lower one or cancel premium subscriptions doubled in the last year. The percentage of the Netflix subscriber’s likely to downgrade increased from 16 percent in 2010 to 32 percent in 2011.
Netflix was established in 1997, with the purpose of selling and renting out DVD’s online as well as via mail. Today it has 23 million members within the United States and Canada and currently is the leader of Internet subscription service. For a flat fee of $7.99 a month it is possible to watch unlimited movies and shows. These can be streamed to PCs, Macs, and TVs. Game consoles like Xbox 360, Nintendo Wii, and PS3 are also compatible with Netflix, which broadens its market. Netflix also streams to multi platform like Apple’s iPhone, iPad, iPod touch, and Apple and Google TVs.
“Despite its rhetorical positioning, both Netflix and PayTV operators have long been aware that there will come a point at which its services are not only dilutive to regular TV viewing, but antithetical to PayTV subscription levels,” Michael Greeson, TDG founding partner and director of research said in a statement. “The question for realistic observers has been not if this will occur but when. According to our latest research, that time is upon us.”
Keeping prices low and expanding services and products makes it tough on cable companies to compete. Verizon FIOS, Dish Network, and Cablevision compete among themselves by combining phone, Internet and TV for one price. It is also possible to choose just one or two out of these three services, but it usually comes to a better deal getting all three. Lately however, the educated cable TV customer finds a better deal in leaving out the TV leg of the package and stream with Netflix.
