NY Times Reports that Video-on-Demand Users Rent Fewer DVD’s
A recent Alex Mindlin article (registration required) in the New York Times is reporting that video-on-demand subscribers are renting fewer DVDs, but are purchasing just as many. According to a study conducted by Forrester Research, video-on-demand users rent an average of 11% fewer DVDs a year but only buy an average of 1% fewer DVDs a year.
The latter statistic should come as no surprise since buying and renting are two different things. The former number isn’t really surprising either, but it doesn’t really tell us how video-on-demand is affecting rental subscription services like Netflix. In other words, no matter how much slower your Netflix turnover is (i.e. no matter how many fewer movies you “rent”), you still pay the same monthly fee. In order to really trace the impact that cable video-on-demand service has on Netflix, we would need reports tallying the number of flat-out subscription cancellations and/or subscription downgrades. I would imagine that there is negative effect, but the question, as always, is one of degree. Does anyone have this info?
Thanks to Hacking Netflix for the scoop.