Not only is Netflix cheaper than a cable TV subscription, the value proposition is higher—much higher, in fact, which some might find surprising (and even outright dispute) due to Netflix's limited catalog of titles. Be that as it may, Netflix subscribers pay roughly three times less per hour of content than cable TV subscribers.
That's one possible takeaway from a comprehensive report by Nielsen (PDF) that examines content consumption across television, radio, TV-connected devices, PCs, smartphones, and tablets. Nielsen didn't set out to compare Netflix to cable TV directly, but using the numbers provided, the folks at AllFlicks did some interesting math to figure out how much Netflix costs per hour of content viewed compared to the same metric on cable.
It breaks down like this: using Netflix's own data, its more than 75 million users collectively stream 125 million hours of TV shows and movies each day. When you break that down further and factor in the cost of Netflix's most popular plan, the average subscriber is paying around a third of a cent per minute of content, or just $0.20 per hour. Not bad.
According to Nielsen, American cable subscribers on average watch around 2,260 minutes of television per week, and that includes timeshifted TV. That works out to around 5.38 hours of TV per day, or 161.43 hours per month. Since the average American pays $99.10 per month for cable TV, according to Leichtman Research, the cost of content viewed on cable works out to a little over $0.61 per hour, or three times as much as Netflix.
It's easy to poke holes in the comparison here. For one, Netflix requires a broadband Internet connection and there's a cost associated with that, though it's moot if you need one anyway. There's also the value of the content consumed to consider—a cable subscriber might be watching a sporting event on ESPN or a blockbuster movie on HBO, whereas a Netflix subscriber might have settled for something stagnant (that can work in both directions).
Whatever, this isn't science at its finest. But it is an interesting analysis, especially since a $100 cable subscription should have so much more to offer than Netflix. What this means for Netflix is that the more worthwhile content it's able to add, the more time subscribers will spend streaming movies and TV shows, which in turn would create an even bigger disparity in value between Netflix and cable.