No Big Surprise: TV Watchers Fleeing Premium Channels For Streaming

With more and more options in premium television popping up, consumer subscription habits are evolving. So it comes as no surprise that subscription video-on-demand services are on the rise, while premium TV channel subscriptions have declined.

Premium TV subscriptions, such as HBO and Showtime, have declined by 6% over the past two years, while consumers flock to SVOD products such as Netflix and Hulu Plus, a survey by The NPD Group found.

However, premium TV still has the upper hand when it comes to consumers. In August 2013, U.S. households with premium TV subscriptions were down to 32%, while those with SVOD subscriptions rose to 27%.

“As SVOD services have gained momentum, it’s clear that some consumers are trimming their premium-TV subscriptions,” Russ Crupnick, senior vice president of industry analysis for The NPD Group said in a news release. “As SVOD increasingly strives to become a channel itself, viewers might consider it to be an adequate substitution for other premium channels, or perhaps they are switching to economize on their time and money spent.”

The NPD Group report comes on the heels of HBO CEO Richard Plepler’s declaration last week that sharing HBO Go accounts isn’t such a big deal for the company. 

Plepler claimed password sharing could have a positive effect on HBO’s bottom-line, theorizing that students who share their parents’ account are more likely to subscribe to HBO later in life.

The future of SVOD services – namely Netflix – come under question recently with the end of net neutrality.  A ruling by a federal appeals court last week gives Internet service providers the ability to charge premium rates, additional fees, or block access to any content provider the ISP wants.

Cord Shaving? SVOD Subscribers Increase, as Premium TV Subscribers Decline, According to The NPD Group [The NPD Group]

Read Comments7

Edit Your Comment

  1. SuperSpeedBump says:

    HBO = Blockbuster Video. Until they realize that the consumer’s freedom of choice is driving the media market, they will suffer and eventually cave, but hopefully not before it’s too late.

  2. ShadyTrust says:

    It’s stupid that Hulu Plus still plays ads with a premium membership. If nothing else, they should add a more expensive tier for those who want to be rid of them entirely.

    • SingleMaltGeek says:

      This is why I’ll never pay for Hulu Plus. At least, not until they allow me to watch without commercials. I can do that on my DVR, with DVDs, on Netflix….why the hell would I PAY to watch them when I won’t even watch free TV with ads?

    • smirkette says:

      +1. After years of consuming 99.9% of my video media on Netflix, I don’t think I could ever go back to commercials. I watched the Doctor Who Christmas Special this year at my family’s house and couldn’t believe how many breaks (and how long!) there were.

    • furiousd says:

      I think most consumers have thoroughly adapted to the “free with ads versus no ads when I pay” model and any company that doesn’t give us what we expect will never make much traction. +1 for smirkette’s Who reference

  3. smirkette says:

    The cable companies are pricing themselves out. A slightly-better than bare bones package in my area starts at $60, and then they want another $60 for internet on top of that. Ain’t nobody got money for that these days! I can barely afford my mid-level DSL connection.

    Needless to say, I’m terrified that we’ll permanently lose net neutrality and the cable companies will do their best to kill streaming providers. I guess I’d switch back to Netflix’s DVD service in that instance because I can’t see myself having the kind of cash I’d need to be able to afford a decent cable package any time soon.

    • furiousd says:

      Agreed, we encountered a similar situation in my family’s business: someone representing Muzak (and whatever the other two licensing companies are) and said that if we wanted to continue playing the radio at our business we’d have to pay $80 per speaker per year, over $5000 per year… to play the radio. We shut off the radio until we found a solution: satellite radio piped through the sound system totalled $75 once for the receiver and Sirius had the licensing fees included. Too many dinosaurs try to hold on to decaying business models price themselves out of the market: Blockbuster already died, I hope the former models of cable companies adapt.