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As Nielsen reports shift away from cable TV Netflix announces biggest price hike

Netflix

A recent Nielsen report on the evolution of US TV viewing habits reveals a 48% increase in the number of households switching entirely to over the air access.

16 million US homes – 14% of households – are now OTA-only, up from just 9% of households 8 years ago. This constituency is split into older viewers (6.6m) looking to save a few bucks by settling for the good, old broadcast antenna option, and younger SVOD (subscription video on demand) subscribers (9.4m), who get everything they need from services like Netflix and therefore see no need to pay for cable.

A significant characteristic of this latter category is a move away from the traditional TV to viewing on mobile devices. These smaller screens tend to lend themselves to solitary viewing rather than the more communal TV experience, something that is greatly facilitated by the on-demand nature of these services.

Nielsen OTA chart

Coinciding with the publication of this report is the announcement from Netflix of its biggest ever price rise in the US. The SVOD giant has been investing more than ever on original programming and has such a massive installed base that it seems to have decided it’s time to start thinking about justifying its massive valuation.

“We change pricing from time to time as we continue investing in great entertainment and improving the overall Netflix experience for the benefit of our members,” a Netflix spokesperson said in a somewhat redundant statement to Light Reading.

“For many users, Netflix is an indispensable video services,” said Tech, Media & Telco Analyst Paolo Pescatore. “There will not be much backlash (for now). This is certainly one way to increase revenue significantly. It needs to focus on financials as well as subscriber growth. Netflix is following the traditional pay TV model of increasing prices annually. Expect other countries to increase prices over coming months.”

Anecdotally linear TV viewing seems to be a dying phenomenon. Even when families congregate around the living room TV they’re just as likely to watch a DVD or streamed box set and, if this correspondent’s experience is anything to go by, people prefer to do their own thing on tablets. Netflix is currently the boss of that sector so it’s probably free to keep raising prices for a while yet.

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