Netflix Does Not Cannibalize Linear TV, Study Suggests

A study by TiVo Research and Analytics suggests Netflix does not actually cannibalize linear TV. To wit, there seems to be no significant difference between the amount of reported television viewing in Netflix and non-Netflix households.

In other words, "Netflix is not currently a substitute for traditional television,”  according to Mark Lieberman, TRA CEO.

But Lieberman quickly added that  “the future of television may tell a different story,” leaving open the possibility that, at some point in the future, Netflix subscribers just might watch less traditional TV, in most cases TV that has been delivered by a video entertainment provider.

So video entertainment providers are likely not to be surprised by the findings about current behavior, nor mollified about the safety of their business models in the future.

As there continue to be some debates about the ways use of  digital video recorders could affect the quantity of linear TV watched, and ongoing worries about ad skipping that endangers the advertising revenue model, so the study will not reassure incumbents that over the top alternatives to linear TV actually pose no threat.

DVRs have arguably not proven to be a disaster for the ad business model. But few would suggest that it has had no impact on the amount of advertising seen by end users. And features such as Dish Network’s Hopper do pose a much more significant amount of danger.

Likewise, though perhaps not a present danger, Netflix could in the future lead to serious amount of viewer behavior and buying shifts.

And there are some findings that could be problematic. Some people are heavy TV viewers and some are not. Typically, heavy viewers buy more of all video entertainment products and services, so viewing is not so much a zero-sum game.

That might, some would say, explain the “no cannibalization” findings. But what will be much more potentially troublesome are lighter viewers, who might not want to watch more TV, or multiple services and features.

Greater market share shifts are likely to happen among the lighter users, because they do not value the experience as much as heavier users.

TiVo’s research confirmed that Netflix households tend to be heavier TV viewers. For example, Netflix households are heavier viewers of premium dramas.

Households that reported viewing "House of Cards" watched 85 percent more HBO than non-Netflix households.

"House of Cards" households watched Showtime's "Homeland" 125 percent more than those who don't use Netflix.

Netflix households viewed Showtime's "Homeland" 26 percent more than those who don't use Netflix.

Of the survey respondents 57 percent reported they subscribe to Netflix, About 50 percent also reported they subscribe to Amazon Prime and 18 percent said they buy Hulu Plus.

About eight percent of respondents subscribe to all three over the top services.

In a sense, the study might be considered good news for incumbent service providers. Netflix, though arguably a potential rival for consumer spending on video entertainment, does not yet seem to have had much impact on overall demand for video entertainment subscriptions.

But few observers think that will always be the case.