Netflix is a machine that cannot be slowed. Today, nearly fifty percent of U.S. households with a TV and internet connection use a subscription based video on-demand service. According to data that was released by Netflix this year, this number is only increasing with goals of reaching over 60 percent of all users. It is becoming an increasingly popular trend to cut out cable television service entirely and transition to “all digital” service.
Meanwhile, the number of U.S. households that have “internet only” is on the rise reaching almost 65 million. By comparison, there are 95 million people in the U.S. who subscribe to one of the top thirteen pay-TV providers. That number has dropped almost nine million over the course of the last three years.
The biggest contributor to the drop is SVOD [streaming video on-demand]. TV networks are taking this as a hint to begin streaming. CBS has a subscription streaming service for $5.99 a month, NBC is working on one, and HBO-Go has attracted a lot of attention with its very popular series Game of Thrones. This is all to combat Netflix’s hold on the streaming on-demand market.
“Where will Netflix go from here?” is not just the question on every cable provider’s mind, but also Netflix itself. Netflix’s record number of subscribers have sparked new fears for investors (2). The belief among shareholders is that Netflix’s uphill growth is bound to slow and this year’s numbers are looking like it’s going to be sooner rather than later. Netflix has decided to refocus – moving away from snagging the viewing rights to cable broadcasted newly released tv shows to focusing instead on producing their own original content. So far, this has proven to be another master stroke by Netflix. Shows like Orange is the New Black, House of Cards, Stranger Things, and Bojack Horseman are receiving rave reviews and funding for extra seasons.
Netflix continues to step ahead of the competition and the question now becomes what will unseat them from their cable throne. In a recent poll, a majority of respondents claimed that they would heavily consider leaving Netflix if their fees increased. With the announcement made by Netflix in April to increase subscription costs, this may be the opportunity cable companies have been needing to gain the competitive edge(1).
In the end, it has been made very clear that ad-free on demand viewing is what the consumer wants. Until cable companies can provide this, Netflix will continue to dominate the internet television market.
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