Peter Kafka

Recent Posts by Peter Kafka

Okay, Okay, Maybe Netflix Is a Problem for Cable After All

Netflix is booming, but the service’s success isn’t coming at the expense of the cable business. Just ask Netflix CEO Reed Hastings or the cable guys, all of whom will be happy to tell you.

Nonsense, says a new report: The Diffusion Group’s survey of Netflix users finds 32 percent of them planning on cutting at least part of their cable bill — either because they can’t afford it, or because they’ve got plenty of stuff to watch online. That’s up from 16 percent a year ago. (Thanks to VideoNuze for flagging).

This jibes with both common sense and other anecdotal evidence we’ve seen. Like Roku’s surveys that show that up to 40 percent of its customers have cut some or all of their cable service after buying a box from the company, presumably to watch Netflix.

And again, because it’s not necessarily about cord cutting, but cord shaving, the Diffusion Group study also fits with statistics that show cable subscriptions holding steady even as Netflix adds millions of subscribers per quarter.

Start paying Reed Hastings $8 a month and you may not be ready to rip out your cable box. But you might be willing to drop down a service tier, or say goodbye to HBO.

Some cable company executives will indeed acknowledge this, but not around people who will quote them on the record. And even when they’re chatting on background, they’re still likely to argue that their company will make it through just fine — it’s the other guys who are screwed.

Meanwhile the Netflix folks, a disciplined bunch, continue to insist that they come in peace. And they keep writing those checks that the content guys are happy to cash, even as they worry about what’s going to happen about the cable business. One day.

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Just as the atom bomb was the weapon that was supposed to render war obsolete, the Internet seems like capitalism’s ultimate feat of self-destructive genius, an economic doomsday device rendering it impossible for anyone to ever make a profit off anything again. It’s especially hopeless for those whose work is easily digitized and accessed free of charge.

— Author Tim Kreider on not getting paid for one’s work