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Survey: Nearly a Quarter of Netflix Subs Cancel Pay-TV Service

19 Feb, 2013 By: Erik Gruenwedel

Reed Hastings may want to revisit his canard that Netflix’s pioneering subscription video-on-demand service isn’t contributing to cord-cutting among cable and satellite TV subs.

About 23% of Netflix subscribers said they have canceled their premium TV service, opting instead to pay for broadband access to stream TV shows and movies over the Internet, according to a survey of 1,200 people conducted last week by financial services firm Cowen & Co.

Among the respondents, 46% (569 respondents) said they had access to Netflix streaming, including 28% (346 respondents) who were paying for the SVOD service.

Hastings and multichannel video program distributors have steadfastly denied any correlation between SVOD and slumping cable video subs. The number of U.S. households subscribing to pay-TV services dropped by 1.5 million in 2011, according to Nielsen.

Yet, Hastings contends Netflix is complementary — not substitutive — to premium TV.

“We compete with HBO like baseball and football compete,” Hastings told AllThingsD.com last year. “We sell to the same person, we deliver some of the same emotion, but it’s not direct competition. People subscribe to both. And the people who love us often subscribe to HBO. They don’t have any of the same content we have, and we don’t have any of the content they have. So it’s a pretty indirect competition for time and money.”

Hasting may also want to revisit that “indirect” competiveness contention.

When Netflix earlier this month bowed all 13 episodes of BBC reboot “House of Cards,” Cowen found that 10% of respondents watched at least one episode in the first 12 days, with some watching six episodes. Nearly 20% watched the entire series.

The rights to “Cards,” which stars Kevin Spacey as ethically challenged Majority Whip Francis Underwood, reportedly ended up in a bidding war between Netflix, HBO and others.

Netflix later this year bows women’s prison dramedy “Orange Is the New Black,” Eli Roth’s horror thriller “Hemlock Grove,” the second season of “Lilyhammer,” “Arrested Development” and “Derek,” among others.

“If future original programs are as successful as 'House Of Cards,' it likely leads to a stickier subscriber base over time,” wrote Cowen analyst John Blackledge.

And that could lead to more households downsizing their cable bill.

About the Author: Erik Gruenwedel

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