Other studies indicate that consumers are attracted to OTT video because of its wide range of viewing options and generally low costs. A new survey released by Parks Associates, for instance, found that consumers ranked Netflix’s Watch Instantly service higher on several customer satisfaction scales than premium broadcast channels because of Netflix’s greater viewing flexibility and lower retail cost. The Netflix service also topped pay-TV VOD on the cost scale.

“Consumer can pay for a month of Netflix for about the same amount as for two pay-TV VOD movies,” said Brett Sappington, director of research for Parks Associates. “Consumers know the quality of the OTT service is not comparable to pay TV quality, but the cost-benefit comparison is enough to affect their purchase decisions.”

The research firm also found that 16% of U.S. broadband consumers now consider switching to an OTT subscription service instead while watching movies on VOD. Similarly, 17% of viewers considered switching to Netflix instead while watching HBO or another premium channel.

“Netflix is competitive against VOD and premium channels because it has a decisive edge in cost,” said John Barrett, director of consumer analytics for Parks Associates. “Its greatest weakness is picture quality, but there are times when the consumer will sacrifice quality for other considerations. Pay TV providers should emphasize their inherent advantages in content and picture quality but also need to develop alternative services that counter Netflix’s advantages in cost and flexibility.”

From the article, "TelcoTV 2012: Consumer Interest in OTT Video Grows." 

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