An Internet threat to cable? Not so far

Posted: June 30, 2011

What about those fears, so prevalent a year ago, about Hulu, Netflix, and other Internet entertainment streamers killing cable?

Fughetabout 'em - for now.

That was the conclusion of a new J.D. Power and Associates study that seems to confirm what Comcast Corp. executives and other pay-TV experts have been saying for several months.

The threat of so-called over-the-top Internet providers - the most prominent of which is Netflix, with about 20 million subscribers - hasn't materialized for cable and satellite-TV companies, at least as of yet. In part, that's because those services don't have the must-see sports and other live programming, according to J.D. Power research.

Based on the April survey by the firm famous for its car-quality rankings, J.D. Power estimates that only 3 percent of TV customers have "cut the cord" by canceling a cable-TV or satellite-TV service and replacing it with the Internet.

Frank Perazzini, J.D. Power's director of telecommunications research, said Wednesday that over-the-top services (over the Internet rather than via cable or satellite) aren't the pay-TV slayers they were cracked up to be. That's because about 52 percent of Americans still watch TV the old-fashioned way - going to the TV when a show they want to watch is on rather than watching it on the Internet or taping it with a DVR - and because Internet services don't have sports rights, Perazzini said.

"If you are a young man and you want to watch a live sporting event, you are still largely tied to a broadcast-TV provider, cable, satellite or telco."

Internet streamers may be larger threats to HBO, Showtime, or other premium channels than to cable TV or satellite TV, Perazzini said. Customers can cancel the premium channels and sign up with Netflix and get more entertainment from the Netflix library, he said.

Comcast officials have reached the conclusion that Netflix users are, generally speaking, movie and TV lovers. Netflix subscribers who also have the Comcast cable-TV service download more video-on-demand TV shows and movies than the typical Comcast customer, Comcast officials say. That indicates they are not replacing one service with the other, but instead watching more video.

The J.D. Power survey noted, not surprisingly, that younger consumers were more willing to cut the cord than older consumers. It also said that consumers generally liked to view video on mobile devices.

The J.D. Power survey also looked at movie-rental firms. The services part of the survey were Amazon, Apple TV, Blockbuster, Google TV, Hulu, Netflix, and Redbox.

Contact staff writer Bob Fernandez at 215-854-5897

or bob.fernandez@

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