A new study has revealed that customers rate Netflix Watch Instantly higher in customer satisfaction than premium broadcast TV. The study, from market research and consulting firm Parks Associates, cites the low cost and high viewing flexibility of Netflix streaming as part of the reason for the service's popularity.
"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 study shows that 16% of U.S. broadband customers consider using a streaming video service such as Hulu or Netflix when watching an on-demand movie. This makes perfect sense, as one month of Netflix Watch Instantly service costs as much as only a couple of video-on-demand (VOD) purchases. The study also shows that 17% of people watching premium TV channels, such as HBO or Showtime, also consider streaming services as an alternative.
"Netflix is competitive against VOD and premium channels because it has a decisive edge in cost," said John Barrett, director of consumer analytics at Parks Associates. "Its greatest weakness is picture quality, but there are times when the consumer will sacrifice quality for other considerations. Pay-TV providers need to develop alternative services that counter Netflix's advantages in cost and flexibility."
Cable services have been overpriced since before internet streaming services existed. Many, if not most, cable channels are full of low-quality, niche programming. Only a few channels, such as ESPN and HBO, could make money charging individually for their high-quality content. Yet cable companies force subscribers to subsidize packages of hundreds of channels. It is taking the massive disruption of Netflix and Hulu to finally break the hold U.S. cable companies have had over TV, and still those companies are digging in their heels by failing to innovate, improve customer choice, or lower their prices. The U.S. Department of Justice only recently noticed the steps cable companies are taking to maintain the status quo and choke out the competition brought by streaming services.