Thursday, June 21, 2012

NETFLIX CHEAPER, BUT WORSE QUALITY THAN PAY-TV VOD

Netflix rates higher in customer satisfaction than premium broadcast television because its costs are lower and viewers have more flexibility, according to a new study from Parks Associates.

"Customers 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 with Parks Associates, in a statement. "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."

Parks Associates also found that when watching movies through video on demand, 16 percent of U.S. broadband consumers considered using an online subscription service while 17 percent of consumers watching TV on a premium channel like HBO considered using Netflix instead.

"Netflix is competitive against VOD and premium channels because it has a decisive edge in cost," said John Barrett, director of consumer analytics with Parks Associates. "Its greatest weakness is picture quality, but there are times when the consumer will sacrifice quality for other considerations. Pay-TV providers should emphasize their inherent advantages in content and picture quality but also need to develop alternative services that counter Netflix's advantages in cost and flexibility."

But as Parks Associates points out, pay TV operators have already have begun to launch Netflix-like services. Comcast, for instance, offers an over-the-top service called Streampix to its customers while DISH Network offers a similar service through its Blockbuster Movie Pass. Of course, these services are for customers who are already paying a significant monthly price for cable and satellite TV services.

From the article, "NETFLIX CHEAPER, BUT WORSE QUALITY THAN PAY-TV VOD" by Josh Long.

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