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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

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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.

"I'd be pissed too, but you didn't have to go all Minority Report on his ass!" -- Jon Stewart on police raiding Gizmodo editor Jason Chen's home

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