Study: Netflix, Hulu Subscriber Sign-Ups to Decrease Throughout 2012/2013
April 5, 2012 1:37 PM
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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
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Hollywood greed at it's best.
4/5/2012 6:50:24 PM
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.
RE: Hollywood greed at it's best.
Dr of crap
Dr of crap
4/6/2012 8:35:48 AM
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!
"This is about the Internet. Everything on the Internet is encrypted. This is not a BlackBerry-only issue. If they can't deal with the Internet, they should shut it off." -- RIM co-CEO Michael Lazaridis
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