Despite the price hike, Netflix is still a 3 times better deal than cable

Reed hastingsEthan Miller/Getty ImagesNetflix CEO Reed Hastings

Netflix has a bit of a subscriber growth problem. Increased cancellations last quarter sent the stock into a nosedive when the company announced its earnings earlier this month.

Netflix blamed some of the cancellations on media chatter in April, which focused on a price increase Netflix began rolling out in June to many customers. People don’t like the concept of a price hike, CEO Reed Hastings argued, and that caused them to drop Netflix.

Hastings’ implication was that Netflix was still providing these customers tremendous value, they just didn’t see it.

That might have an element of truth, according to calculations done by AllFlicks, a site that tracks Netflix data and analyses the streaming industry.

AllFlicks did some rough estimates and found that the average Netflix subscriber pays $0.20 per hour watched, versus the average cable subscriber who pays $0.61. That’s a difference of over three times.

AllFlicks used Netflix’s metrics for total hours streamed and number of subscribers to estimate that the average subscriber watches about 100 minutes per day. Taking the $9.99 standard plan, which is by far the most popular, AllFlicks came to around $0.20 per hour.

To compare this to cable, AllFlicks took Nielsen data that said the average US adult cable subscriber watches 2,260 minutes of TV per week (this includes time-shifting). Combining this with data from Leichtman Research, that says the average American pays $99.10 for cable, AllFlicks came to about $0.61 per hour.

Here is a chart from AllFlicks:

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