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About 27% of Pay-TV Customers Also Subscribe To Netflix: Study

More than a quarter of all U.S. subscribers to cable, satellite or telco TV services (27%) also are Netflix members, representing an incremental "cord throttling" threat to traditional providers from over-the-top video, according to a study by research firm NPD Group.

Almost half of pay-TV subscribers -- 46% -- also pay extra for premium movie channels or sports tiers, and 24% watched movies via both paid and free video-on-demand from their providers. On VOD usage, Comcast leads the industry with 41% of subscribers using video-on-demand, followed by Verizon's FiOS TV at 38% and Time Warner Cable at 20%.

At the same time, those customers are also increasingly watching TV programming and movies from other sources, including Netflix, Hulu and YouTube, according to NPD senior vice president and entertainment analyst Russ Crupnick. Overall, 10% of pay-TV subscribers streamed movies for free, and the same percentage streamed TV programs for free, with the networks themselves the most popular sources for free online TV viewing.

"Even though many consumers are paying for more content from their TV-service providers in the form of premium channels and video-on-demand, there's still quite a lot of alternative video downloading and streaming activity going on," Crupnick said.

A survey by Credit Suisse conducted in August 2011 found that 25% of consumers surveyed currently subscribe to or use an over-the-top service, such as Netflix, Hulu Plus or Amazon Prime instant videos, with roughly half saying they use OTT services as a substitute for pay TV. The analyst firm suggested upwards of 20% of pay-TV subscribers may cancel service in the next few years primarily because of the high cost of multichannel video service.

According to NPD's study, over-the-top video viewers have a mean age of 37, which is five years younger than the average cable TV viewer. "If the programming and user experience aren't on par with digital alternatives, operators could find themselves increasingly sharing their customers with Netflix or other OTT services, like Apple TV and Roku," Crupnick said.

NPD's "Entertainment Trends in America" report is based on 10,058 surveys from respondents age 13 and older conducted in July and August 2011. The final survey data was weighted to represent U.S. population.