Print 16 comment(s) - last by antistormtroop.. on Apr 10 at 12:49 AM

Convergence Consulting Group expects a decrease in the number of customers signing up for Internet streaming services throughout 2012 and 2013 because of rising licensing costs

With the rising popularity of video streaming services like Netflix and Hulu, many believed that customers would say goodbye to traditional cable services and flock to more affordable internet-based alternatives. However, a new report says otherwise.

Convergence Consulting Group, a Canadian research firm, released a new report this week that shows a jump in video streaming popularity from 2008 to 2011, but predicts a decline in 2012 and 2013.

The report found that 2.65 million Americans left their cable TV providers for internet subscriptions between 2008 and 2011. Cable TV packages were just too expensive while internet subscription companies like Netflix offered low monthly prices for a variety of content that can be viewed on several different devices.

In 2011, only 112,000 U.S. citizens signed up for cable TV packages. This is a significant drop from 272,000 who signed up in 2010.

However, Convergence Consulting Group doesn't see this trend lasting. In fact, it expects a decrease in the number of customers signing up for internet streaming services throughout 2012 and 2013 because of rising licensing costs.

In 2010, Netflix had to pay $1.1 billion in streaming rights. In 2011, this price jumped dramatically to $3.9 billion. With rising costs, Netflix was forced to up its subscription prices from $9.99 a month for video streaming and DVD rental-by-mail to $15.98 for both, or $7.99 for video streaming or DVD rental-by-mail separately. This move angered customers to the point that Netflix was forced to lower its Q3 2011 subscriber forecasts from 25 million to 24 million. Other issues, such as limited streams and a DVD spinoff company called Qwikster (which was later killed off), caused customers to leave as well.

Convergence Consulting Group only sees streaming rights prices increasing annually from this point forward, and predicts that video streaming companies will have financial troubles ahead due to these price increases. In other words, the future of Netflix, Hulu and others is unclear for now, and high prices may lead to less relevant content, meaning fewer incentives for customers to join.

Last month, Netflix said it planned to join forces with cable services at some point in the future in order to compete with HBO Go, but Comcast later shot the video streaming service down, saying it had no plans to offer Netflix on its Xfinity TV service.

Source: Yahoo

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

I don't get their reasoning
By Denigrate on 4/5/2012 2:44:20 PM , Rating: 3
So I pay $8/month for Netflix, and do not subscribe to any cable TV service. Even if Netflix bumps the cost of my streaming only service to $16/month, I'm not going to subscribe to cable TV at $50+/month.

RE: I don't get their reasoning
By Mitch101 on 4/5/2012 3:01:19 PM , Rating: 2
Cable lost TV subscribers last year and if they keep messing with my data feeds they are going to lose me getting internet connectivity with them as well. Unlike other parts of the country I have two cable companies in my area and I would expect better DSL service to be rolling through soon.

RE: I don't get their reasoning
By hughlle on 4/5/2012 3:55:19 PM , Rating: 2
And i'm not going to subscribe for any number of dollars a month if i can get what i want for free :D call me a filthy bad man, but i'll start paying when they make it worth paying for. I'm not going to pay a monthly subscription if say 99/100 of the shows available are a load of crap. It seems a very simple notion, if you offer good content people will pay, offer crap and well... :)

RE: I don't get their reasoning
By Reclaimer77 on 4/5/2012 4:24:40 PM , Rating: 2
I've been getting my stuff for "free" since Napster came out. I'm very experienced in doing so. So I hope you will think about what I'm saying when I say that, for the most part, there really is no comparison between Netflix and file sharing.

Pirating is great if you want a song or movie here or there, but I can sit on my ass on my couch and watch entire seasons of shows, commercial free, from Netflix. Obtaining these from the Usenet (I pay for a premium usenet service) or torrents represents a SIGNIFICANT investment in time, hard drive storage space, and annoyance. Why bother when I can just turn on my PS3 and get INSTANT content for the same allocation of bandwidth as it would take to download something?

I have found that since subscribing to Netflix, the rate and frequency at which I pirate something gets less and less. I'm probably going to cancel my Usenet account actually, because I'm really not using it enough to justify it now. Netflix is just SO convenient and polished. And sorry but 99/100 of their shows are certainly not "crap". Certainly worth 8 bucks a month.

RE: I don't get their reasoning
By TakeASeto on 4/5/2012 4:44:14 PM , Rating: 2
Have you tried nzbplayer? It's pretty sweet for streaming usenet videos. It's a little bit of a pain if you commonly need to repair your downloads though.

RE: I don't get their reasoning
By bah12 on 4/6/2012 9:52:26 AM , Rating: 1

Reclaimer of all people pirates, and does so fairly often at that?

Where is all the "no one is entitled" anti-liberal thinking in your justification for stealing another's work? So people aren't entitle to healthcare or unemployment, but you are entitled to that song you really like?

Let me guess it's your protest to over priced media. Fine then how does your "let the free market decide" stance not conflict with that too. If you let the free market decide then the only viable action would be NOT to consume.

Anyway I actually consider myself a conservative, and usually agree with you. But your actions here certainly are very liberal.

/deducts5points from Reclaimers conservative card.

RE: I don't get their reasoning
By tayb on 4/5/2012 8:13:07 PM , Rating: 2
Your argument is nonsense. If you thought the content was crappy why would you bother downloading it??

RE: I don't get their reasoning
By TheJian on 4/7/2012 10:31:28 AM , Rating: 2
I'm just guessing here, but I don't think he thought it was crap until it was downloaded then watched. Most aren't firm believers in reviews these days with them being bought and paid for or being rated by hacks like NIELSEN. Who do they have watching the crap they say is popular? I don't know who votes on awards shows, but I'd venture its the same idiots using nielsen boxes...LOL.

Your argument is nonsense. You can't know how something tastes, smells, sounds etc until you...wait for it...TRY IT. Don't tell me to watch a trailer. I get the good 3 minutes of the movie's action sequences and then find the other 87 minutes or so is just some time I wish I had back...LOL. Cable will never get me back without going below $20 and allowing me to choose my, oh I don't know, 15 channels for that $20 (pick a good number and price, whatever, I just have no use for 30 spanish channels and a ton of music crap etc, public access crap etc.). I pretty much need USA/SCIFI (never should have changed to syfy...clowns), TNT, FOX, a few news channels and nature/ history stuff. The other 90 channels are useless. Heck a good 1/3 of them I can't even understand the language...WTF? Get out of my country. :)

You'd have me pay for HD I don't even get on most channels. Most of the stuff is still in 720p. I hope cable dies a quick death. Only google/microsoft/apple can stop them. Lay $20-40bil in pipes draped across america (these three could easily fork over 10bil each for the cause which seems to be about the price for blanketing america with fiber etc) and kill cable until they bleed to death. Charge $20 and kill them. They're such badly run bloated companies they'd go bankrupt before they could stop losses. I'd say this could be done in under 3 years then bought for a song if all 3 companies worked together to kill cable.

It's like turning the Intel boat around as opposed to nimble AMD. AMD is getting killed but I'm talking about turn around time to change a project etc (it's just a huge ship at Intel/MS). Take Itanium. Once they start down a path they pretty much run the course, where AMD just deletes the products from the roadmap without ever believing they can shove something down our throats (my preferred way to be treated by a company - delete your product if it sucks don't shove it down my throat :)).

They would have NO debt on these lines and would be total profit once it was all in place. Google appears to get this and is rolling out service in a few states. Apple looks to be starting in that direction (all are talking content etc to get off lic fees). People just need to realize you will need to give some stuff up for a while in order for this to happen. There are sacrifices moving off cable, but for anyone that can live without channels you lose you should head to netflix/hulu/vudu/crackle etc or a combo of them to cover more stuff. You will never lower cables prices by paying them. You need to LEAVE and hurt their financials. Phone too! Vonage, google voice etc. Maybe just move to cell, with Ting or one of the other non contract vendors.

I'm about to finish up convincing my parents to dump cable. I just had to secure a way to watch fox business for them (roku/raspberry pi covers that) and something in history/animal/nature to make it happen. Other than that when asked what they watched their list looked like mine with over 1/2 channels never even watched (like at all - they flick through favorites and that's about it when watching TV).

By HackSacken on 4/9/2012 11:02:24 AM , Rating: 2
So what do you do when you eat something from a restaurant that you didn't enjoy?

By antistormtrooper on 4/10/2012 12:49:27 AM , Rating: 2
Yup I agree

Hollywood greed at it's best.
By SixSpeedSamurai on 4/5/2012 6:50:24 PM , Rating: 2
Knew it would not be long before Hollywood choked Netflix. What they don't understand is we are not going to subscribe to services from each studio.

I'm on Netflix and Hulu Plus with Over the Air TV. They'd have to go to near $25 each to get me to go back to satelite. No way I'd ever go cable.

Ending cable monoplies would solve a lot of problems for consumers.

By Dr of crap on 4/6/2012 8:35:48 AM , Rating: 2
You are right they don't get it.
But them all together under one access point, and stop being so F$$king greedy!

If they NEED exta cash, I'd pay a buck or two extra for new movies available for streaming. Not sure what they want. Do they want us to have to buy the DVD, Blu-ray for each movies that comes out?
Hell I can wait for it to be on Redbox. Kind of screws that up!

Big Media doesn't get it
By tayb on 4/5/2012 8:22:17 PM , Rating: 3
Big media can squeeze out Netflix with ridiculous licensing costs but I'm not going to return as a customer unless they significantly change their model.

Time Warner calls me all the time asking me if I want to add home phone and television service to my internet only plan. I always tell them I would be happy to if it's $20 a month no contract and I get HD service with an HD DVR. Unfortunately the best price I've ever been quoted was $45. Why would I ditch Netflix at $8/month for Time Warner at $45/month? Netflix could double their prices twice more and I STILL would not switch back.

By fishman on 4/6/2012 7:13:57 AM , Rating: 2
Video piracy would eventually be all but dead (except for just the very latest movies) if the content providers don't try to drive up the cost of legal streaming.

Pure rubbish
By la-viewer on 4/7/2012 4:55:37 PM , Rating: 2
Did the cable companies pay for this report? This report fails to mention the differences between business models. Netflix writes checks, so their costs will go up for sure. And if they raise their prices, it'll still be cheaper than cable.

Hulu does revenue sharing and from recent articles they pay more per user than the other streaming models. Guess commercials are a good thing after all.

What this study should be talking about is the demand and the need to kick up revenues from the growing crop of online viewers.

I haven't had cable for over a year and I LOVE it. I don't even have a TV now. I watch everything online. The majority of it through Amazon or Hulu or iTunes. I like that I can pay for some shows and see other ones for free on Hulu. But I must be honest - if HBO had the balls to offer an online only service for their Originals only for $20 a month - I'd subscribe in an instant. Sure they made $28 from me on Season 1 of Game of Thrones, but I would've paid $200+ for the privilege to have seen it while it was on along with other HBO Originals... Cash on the barrel!

As for sports, I just watch the NFL and again I'd happily pay $20 a month to watch a select amount of teams or just to follow my team alone! And I'm not the only one who's willing to pay.

And there's nothing stopping the NFL from doing this, because we all know that the only group that makes money off the NFL - is the NFL. So why isn't the NBA doing this or Baseball (and if they are already in some or all markets, then I stand corrected)?

Granted TV rights and syndication and licensing are big business and online is the new frontier. But it's filling up with a market of people who are willing to pay ala-cart. So sell it to us. In the age of the debit and credit card you can get the money right away. Price it right and you'll have some easy money.

Why isn't it happening? I know why. Because these big brave men of industry are nothing but a bunch of fat, old, scared, weak and out of touch men. And I'm being a little harsh... this is still the dawn of the new age and the money is smaller than traditional methods - but I thought we were a nation of capitalists?

"We don't know how to make a $500 computer that's not a piece of junk." -- Apple CEO Steve Jobs

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki