Netflix, Hulu have a rerun advantage

Some would-be cord cutters are just complacent couch potatoes, a survey says.

By Jason Notte Oct 19, 2012 3:14PM

Image: Couple with laptop (Corbis)The next time you hear someone crow about a show they've discovered on Netflix's (NFLX) streaming library, all the episodes they've uncovered on Hulu Plus or how much of a workout their Roku is going to get once their Amazon (AMZN) Prime membership kicks in this holiday season, resist labeling them an effete cord-cutter.


They're just watching reruns, like every other TBS and Nickelodeon-viewing cable and satellite customer.


A new survey released at at an Advertising Age conference on Wednesday found that 42% of TV viewers reported watching more streamed content this year than last year. While 8% did so because they were cutting back on cable and 10% had canceled cable and satellite altogether, a whopping 73% said they were streaming just to catch up on episodes of their favorite shows.


That may sound like good news to cable and satellite companies looking to keep potential cord cutters with more on-demand offerings, but but even a sunny survey conducted by television-centric TVGuide.com couldn't hide encroaching threats to service providers. Of folks in the survey who pay for digital content on Netflix, Hulu Plus, Apple (AAPL) iTunes and Amazon Instant Video, 30% reported that they're watching more of it now than they did in 2011. A whopping 68% are watching between one and five hours of video per week on tablets and mobile phones.


"That's not to say everyone is cord cutting, or that cord cutting is the dominant factor, but it's a factor," TVGuide executive Christy Tanner told Ad Age.


Cord cutting exists, but its pace is more glacial than a commercial-addled midday movie on AMC. Analysts are predicting that nearly 420,000 video subscribers will do away with pay TV this quarter, a jump from the 400,000 subscribers Sanford C. Bernstein says cable and satellite providers lost in the second quarter and the 348,000 IHS Screen Digest says they lost during the same quarter a year ago. Those figures are still far overshadowed by the millions who'll stick around.


Though the price difference between $8-a-month subscriptions of Hulu Plus and Netflix or $80-a-year Amazon Prime memberships and their cable and satellite competitors can be substantial, Variety's Andrew Wallenstein Thursday used a Price Cooper Waterhouse consumer satisfaction survey to explain why streaming services are more of a supplement than a scourge to cable companies. Wallenstein posits that "cord cuddlers" cling to cable and satellite because once they have said service, it's easy to stay they course if it's already bundled with the Internet.


Wallenstein noted that nearly three quarters of those polled the Price Cooper Waterhouse survey had no plans to change providers in the next year, while 59% hadn't bothered switching providers within the past year. The survey credit that latter stat to consumer complacency. Basically, doing stuff is a lot harder than not doing anything.


This doesn't mean cable and satellite providers don't have reason to be concerned. According to Nielsen, the number of households subscribing to pay-TV services dropped 1.5% (or roughly 1.5 million) in 2011. That same industry hadn't posted a subscriber decline until 2010.


Verizon's (VZ) FiOS video service, for example, added 119,000 new subscribers last quarter and increased revenue, according to its Thursday earnings report. However, just last month, FiOS TV head Maitreyi Krishnaswamy told the Tampa Bay Tribune that cord cutting is still a growing concern.


"No, that trend is not stopping. It's growing," he told the Tribune. "The question is: Is it growing enough for us?"


Verizon is teaming up with Coinstar's RedBox to launch a Netflix competitor later this year and is already looking at how consumer preference for the a la carte format embraced by Netflix, Hulu and others will affect its contracts with TV studios and other media entities.


The streaming world may be stuck in reruns now, Netflix and others are producing more original programming like Netflix's planned revival of former Fox series Arrested Development. While some viewers will see that as a reason to snip the cable cord, savvy service providers may just work those offerings into an expanding, on-demand, multi-platform viewing schedule.


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43Comments
Oct 19, 2012 5:51PM
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All I can say is I cut my satellite over a year ago and paying only 8 a month with Netflix. You can't beat the price and there's always something to watch.  Besides people need to be "out there" living life not watching reality sluts live it up on TV.  Claim your life back and make the switch...you won't regret it!!
Oct 19, 2012 6:31PM
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I work at one of the Netflix call Centers, I I have to tell you people aren't cord cutting because they can't streaming cable shows. They are cutting because of the price they are charged by the cable companies. And now they are starting streaming services and they are charging for it. On top of your normal cable bill. @Elwood: Netflix isn't really cutting back as much as much as you think. They gave added more in the last year then they ever have. It probably is they haven't added things lately that match your tastes. And on top of that companies are holding tighter to shows then they used to. Netflix would love to have everything, trust me.
Oct 19, 2012 7:17PM
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Netflix has definitely stepped up their game!For 8 bucks my kids can watch from their room on the 360 and we have our computer hooked up to tv in living room plus we have a laptop hooked up to tv in our room.Had Direct. tv 4 for all 3 rooms paying 135.00 month plus misc.tax so no complaints here 4 netflix.... nothing but love!
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Cable companies have had a virtual monopoly in many areas for decades.  I'm glad to see this new competition from online streaming providers.  Maybe it'll force lower prices from cable/sattelite TV companies. 

 

Let's see:  Netflix:  $8/month and no commercials

 

-or-            Cable:  $50+/month and more than 15 minutes of commercials/hour!

 

It's no surprise this is happening.

Oct 21, 2012 7:46AM
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I love these people talking about the cable companies the whole problem is your paying 5 times the amount your paying for Netflix and I have full cable and most time we go back to Netflex if it were not for the sports I would drop cable in a heartbeat!

I love Netflix

Oct 19, 2012 9:44PM
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I must admit I mowed through Cheers and am about 3/4th through the runs of Wings and Magnum PI.
Oct 22, 2012 9:14AM
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If it was not for sports...i would not have cable...I could easily live off Netflicks but the only thing I really watch is sports anyways.
Oct 22, 2012 8:25AM
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As soon as my contract with Direct TV ends I will end that too, I have netflix and it is better than being tied into some two years contract of the same refried content. At least with netflix I get to choose what I want when I want it. I believe that the future of TV is streaming and I hope that the competition heeps the price down
Oct 22, 2012 9:49AM
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I absolutely love Netflix.  I had to cut the cord because I lost my job and just can't afford it.  Yes, I do miss being able to channel-surf (and watch local channels without having to mess with stupid rabbit ears--what a throwback!).  But really, most cable channels show nothing BUT reruns.  Why pay extra for them?
I do wish the content providers would get their heads out of their butts and release their shows. We're all going to get used to not watching them before long.  The way they do business is deplorable.  They don't realize that being consumer-friendly will get them much farther than their current draconian bullcrap. 

Oct 22, 2012 10:50AM
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Also with Netflix you pick what to watch and when to watch.Your not on someone else's schedule.
Oct 22, 2012 10:18AM
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I pay $8 for Netflix and $29 for my internet service. My father in law calls it squalor because I have to wait a whole day to watch any of our network shows. He is also in his mid 50's and living paycheck to paycheck so I don't care too much about what he says and we only watch TV on the weekends:)
Oct 22, 2012 1:21PM
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I have netflix for the movies and have hulu+ also.............I tried the amazon one but let it go cause netflix is king in my book really you get better movies and shows with the streaming and it looks tons better than the sattelite feed. As for local programming I use a 40 year old tv antenna hooked up to an amp and rotater and pick up fox,abc,nbc,cbs and public tv with the extra over the air channels they have to so I get about 35 channels that way from the Atlanta ga direction which is about 85 miles from me and the greenvilleSC direction which is about 60 miles from me. It cost me 160 bucks to do the antenna, 16 bucks mth.  for netflix and hulu and 50 mth. for high speed internet and home phone and really I have more shows and just as much sports as the cable and sattelite feeds...............hey, you can't beat this and you are absolutely crazy if you paying for the other ! Advice ?.........Cut the cable and dish !
Oct 20, 2012 4:28PM
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Good call buddy. Now you can post an article on Monday showing how the charts tell you that the market is going to crash.
Oct 22, 2012 3:16PM
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We "bundled", (tear)... and are stuck for a bit... but we only really use the cable for news and weather... otherwise just about everynight is a Netflix night... No more arguments over channel surfing during the commericals! LOL

 

Seriously, if there was a way to choose the channels and pay for the ones you choose, I'd probably just get a "news" package and toss the rest... Netflix and Hulu are a blessing! - and on my schedule too!

Oct 22, 2012 12:48PM
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I cut the cord and I don't miss Time Warner or Dish bills for TV. For the small price of 16 dollars a month I can get Netflix and Hulu Plus. I already had Amazom Prime for the free 2 shipping, so now I have that as well.

It's a lot cheaper to stream in my opinion and the beaty of it is if I have my laptop and a connection I can watch TV anywhere.

Oct 22, 2012 5:13AM
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i wish comcast would show more of a wider variety of their programming and movies!
Oct 22, 2012 3:24PM
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Well lets hope the prices stay low.  I not so sure with this internet tax thing I have heard about
Oct 22, 2012 2:18PM
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Yep I cut the cable cord and if I could find my internet cheaper I would.  I still have friends who have cable or sattelite so if I really have to watch something (Madmen)  then I can have them divr it and away I go.  A bottle of wine for an evening at friend's house to watch the shows they are willing to pay for is a deal.
Oct 22, 2012 12:26PM
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I  have cable @10/mo for basic  and even though I could use my 360 for Netflix, I purchased RCA Wi-Fi 1080p HD Streaming Media Player from HSN for around $60 and get Netflix, Hulu, Pandora, Youtube. I pay $8 for the Netflix. Bought Majic Jack 2 yrs ago and cut off the phone bill too!

 

Oct 22, 2012 11:58AM
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Oh and I forgot the sports, I want to be able to watch a football game while I'm on a bus, plane, train or even in a car.  Don't want to record anymore.  I want to cut my electric bill by getting rid of all this added on crap.  And did I mention the ugliness of the dirt catching, fire hazard , monstrosities of piles of wires.

Hopefully & thankfully I'm done - thanks for listening.

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