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Parks: Netflix does cannibalise pay-TV

A combination of low service cost and viewing flexibility has given online video service Netflix an edge over pay-TV VOD and premium broadcast TV, according to a new study from US firm Parks Associates, which finds that Netflix Watch Instantly rates higher in customer satisfaction as a result.

“Consumers can pay for a month of Netflix for about the same amount as for two pay-TV VOD movies,” said Brett Sappington, Director of Research at Parks Associates. “Parks Associates research shows consumers know the quality of the OTT service is not comparable to pay-TV quality, but the cost-benefit comparison is enough to affect their purchase decisions.”

The Netflix service also influences the decision processes of pay-TV consumers, raising the possibility of Watch Instantly cannibalising pay-TV offerings, according to the study.

Parks Associates research found that 16% of US broadband consumers consider instead using an online subscription service as an alternative to pay-TV VOD. Similarly, 17% of those watching TV programs on a premium channel like HBO consider using Netflix instead.

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