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The future is bright for Netflix and bleak for basic cable — these 3 charts show why (NFLX)

Category: Home Tech
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We just got another glimpse at how much trouble the traditional pay TV business is in because of Netflix and online streaming.

The portion of US consumers who don’t subscribe to any kind of traditional pay TV service is now nearly one in three, according to a new survey from Cowen Equity Research. Among all consumers, basic cable is now a distant second to Netflix when it comes to the service they say they use most often to watch video content on their televisions. And among Millennials, basic cable is no. 3, topped by not just Netflix, but YouTube too.

Millie Bobby Brown as Eleven in “Stranger Things,” one of Netflix’s hit original series.
Netflix

The survey “once again highlights the importance of Netflix in the home, particularly among Millennials,” Cowen analyst John Blackledge said in the research report that contained the survey data. Netflix’s well-publicized push to invest in original, high-quality shows and movies, he continued, “likely ensures [it] the top spot in the living room over time.”

Some 19% of consumers are cord cutters — those who formerly had a cable or satellite subscription but have dropped it — according to Cowen’s report, which surveyed 2,500 people total. Another 12% are so-called “cord nevers,” people who have never signed up for a traditional pay TV service.

That data roughly corresponds with recent research from Leichtman Research Group. At the end of the second quarter, some 91.3 million US households — about 72% — had some kind of multi-channel pay TV service. That was down from 88% of US households in 2010.

Consumers are tuning in Netflix instead of basic cable

Basic cable used to be the dominant form of TV watching. But no more. It’s been displaced by Netflix.

Some 27.4% of consumers say that the video service they watch most often on their television is that of the streaming giant, according to Cowen’s survey. Just 20.2% of consumers said basic cable is their most frequently viewed video service. Another 17.5% of consumers said broadcast TV was their most frequent choice.

Cowen Equity Research

Things were even worse for traditional TV providers among younger consumers. Among consumers aged 18 to 34, streaming services ranked first, second, and fourth in terms of the video services they most frequently watched on their televisions.

A whopping 39.6% in that age group said they were most likely to tune in Netflix on their television than any other video service. In second place was YouTube, the top choice among 16.9%. In fourth place was Hulu, with 8.3%.

Basic cable came in third, the top choice among just 12.4% of those in that age group. Broadcast television was a distant fifth, with 7.1% support.

Cowen Equity Research

Even if all the cord cutters and cord nevers are excluded, things don’t look particularly good for traditional TV service providers. Although basic cable took the top spot among these consumers in terms of the video services they watch most often, it’s lead was tiny. It was the top choice among just 26% of these consumers; Netflix, by contrast, was the most frequently viewed service among 24.9% of them.

Cowen Equity Research

As part of the report, Blackledge reiterated his “outperform” rating and $400 price target on Netflix’s stock. That target was pushed slightly further away with Wednesday’s broad market selloff. Netflix shares finished Wednesday’s regular session down $29.82, or 8.4%, at $325.89.

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