Netflix and Cable TV: More Customers Move to Streaming Video


The trend of consumers eschewing their Cable or Satellite TV subscription in favor of Netflix or other Internet video-on-demand services continues unabated. If you are looking for an alternative to traditional subscription based TV, this may be an option worthy of further exploration. Support for streaming video on a wide range of devices — from the Roku to the Chromecast to Apple TV — are giving customers choices, and in many cases a hope for a lower monthly cost ultimately wins.

So a measured decision between Netflix and Cable TV is made possible with a robust High Speed Internet service. Most Internet speeds over 5 Mbps support HD quality video streaming, provided there aren’t multiple users and devices sharing the same Internet account. In that case, faster broadband and possibly a high-end dual band router offer better support for simultaneous HD video streaming to more than one device.

Let’s take a closer look at whether the lower cost of video streaming services makes more sense than the better video quality and additional features of Cable and Satellite.

Subscription Streaming Video Services Grow in Market Share

A report released in March by the television ratings service, Nielsen, reveals the growing market share enjoyed by Internet-based video streaming services. The Nielsen report showed that the number of residences with TV and/or High Speed Internet service that subscribed to a video-on-demand service grew from 36 percent in 2013 to 40 percent last year — an yearly increase of 11 percent. Of those residences, 36 percent subscribe to Netflix; 13 percent subscribe to Amazon Prime, while 6.5 percent enjoy a Hulu Plus subscription.

Another market research firm, SNL Kagan, noted that the number of households that are “Internet Only” — with no Cable TV or Satellite TV subscription grew to 10.5 million in the third quarter of last year as reported in the Huffington Post. This is a 16 percent increase over the same period in 2012. The Wall Street Journal also reported that television ratings have declined over the last half of 2014, with 40 percent of the decline due to the increased number of “unplugged” consumers leveraging on-demand video streaming services.

Still, Cable and Satellite service offer their own set of advantages, including channel guides with integrated DVR functionality. They are also able to leverage a customer’s High Speed Internet account for on-demand programming — like first run movies before they hit channels like HBO and Showtime. Bundles provided by Cable and Satellite companies also offer customers a chance to save money by including Home Phone and Internet along with TV service on one convenient bill.

Competition Between Streaming Video Services Also Increases

The other benefits of Amazon Prime — including two-day shipping and television exclusives, like the upcoming alternative history series, The Man in High Castle, based on Philip K. Dick’s award-winning science fiction novel — are raising the stakes in the competition between the various Internet services. Still, the relative lower cost of an individual subscription means many consumers are able to subscribe to more than one on-demand video service and still save money.

Considering the growing decline in television ratings, the major TV networks are starting to get in the game, with CBS recently introducing their own service with a subscription fee of $5.99 per month. NBC also has their own service in development, and it is reasonable to expect ABC/Disney and Fox to roll out their own on-demand offerings in the near term.

Not to be outdone by the major television networks, the venerable channel HBO recently introduced their own streaming video service, known as HBO Now. Only available for Apple devices for the first few months, it is expected on most major streaming devices (and smart TVs) by the end of the year. With HBO Now available, long time competitor, Showtime recently announced their own video-on-demand offering is in development.

While this added competition will hopefully keep monthly subscription fees to a minimum, exclusive content, like Game of Thrones on HBO and Homeland on Showtime, will force many customers into subscribing to multiple services. Still, the fees for three to four on-demand services won’t be too much more than $50 per month.

Competition is always good for the consumer — either the Internet-based services competing with industry veteran Cable and Satellite providers or the growing battle between the different on-demand options. Ultimately, customers are now finding that making a decision between Netflix and Cable TV is largely based on choosing between a lower cost for streaming video versus the wider range of features offered by traditional subscription television providers.

Photo Credit: Brian Cantoni