I’ll be honest: I don’t know whether to file this one as a win or a loss for Netflix. According to a new story at HomeMediaMagazine, a surprisingly significant chunk of Netflix streaming subscribers have canceled premium TV subscriptions altogether, and opt for entirely online alternatives. This is big news, since much of Netflix’s recent strategy seems to involve crawling in bed with major cable distributors like Time Warner and CableVision (the former of which, by the way, is none too happy with Netflix’s tactics). In an effort to aid that marriage, of course, Netflix CEO Reed Hastings has been making the rounds, talking about how Netflix complements, not threatens, the traditional linear cable distribution model.
But, well, here we have, in stark numbers, a serious challenge to that point of view:
About 23% of Netflix subscribers said they have canceled their premium TV service, opting instead to pay for broadband access to stream TV shows and movies over the Internet, according to a survey of 1,200 people conducted last week by financial services firm Cowen & Co.
Granted, if you’re not an absolute statistics geek (and given Nate Silver’s celebrity status after the last election, you may well be, but if…), you might be thinking that a sample of 1200 people is hardly large enough to paint a solid picture of what some 30-odd million Netflix subscribers are actually up to. But I crunched the numbers myself, and if Netflix’s fourth-quarter projections held true, and it has 27.1 streaming million subscribers, a sample of 1200 people would give you a roughly ±3% margin of error with 99% confidence, and about ±2.4% margin of error with 95% confidence. Which would translate into anywhere between 20 and 26% of Netflix streaming subscribers cutting the cord.
Granted, I’ve strayed from the point of HomeMediaMagazine‘s story a bit, but I thought that was worth digging into, nonetheless. Head on over to the source story for more analysis.