Netflix Users More Likely To Downgrade Cable Services

Brad Chacos

The PR tune being danced by Netflix and the cable companies is so nice, it's almost nauseating. Neither side wants to step on the other's toes, so all the press we see is PR spokespeople assuring America that, yes, there is room for both operations and no, Netflix isn't cutting into cable's customer base. A new survey conducted by the Diffusion Group suggests that might not be entirely accurate; even though cable isn't losing too many customers to Netflix, the industry's definitely losing money thanks to digital streaming.

The survey focused on broadband users who both employ Netflix's streaming service and subscribe to some form of traditional television service, such as cable or satellite. Diffusion Group questioners asked whether or not the users were likely to downgrade their traditional TV subscription services in the next six months. Almost a third of all respondents, a full 32 percent, said they would. That number doubled since last year's survey, when 16 percent of respondents said they planned on downgrading.

Why the change? You still find traditional answers, like "Cost of service" and "Need to save money," in many people's explanation of their cable-downgrade plans. But behind that, 34 percent specifically cite online video as the reason for the downgrade. That percentage jumps for Netflix power users; moderate-to-heavy Netflix streamers cite online video, and often Netflix in particular, as the cable-cutting culprit 61 percent of the time.

The numbers cast doubt on the claims that the two industries won't harm one another. Even if a Netflix user doesn't cut the cable cord entirely, ditching expanded services like ESPN and the various premium takes a big chunk out of cable company pockets. How many people need to revert to basic cable before the Netflix-cable dance gets a bit more aggressive? The question isn't if it will happen, notes Michael Greeson, TDG's director of research, but when .

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