While industry analysts continue to speculate about a possible Netflix Australia launch date, a new study in the US suggests that a growing number of consumers are opting to pay for standalone Internet video services instead of subscribing to premium cable channels like HBO or Showtime.
Total U.S. households that subscribe to HBO, Showtime, Starz and other premium TV channels declined by 6 percentage points over an 18-month span, from 38% in March 2012 to 32% in August 2013, according to a report from research firm NPD Group. Over the same period, subscriptions to Netflix and other subscription video-on-demand services including Hulu Plus and Amazon Prime Instant Video rose 4 percentage points, from 23% to 27%.
One big caveat to this report: The data does not demonstrate cause and effect. NPD did not ask consumers if they dropped premium cable TV services because they were switching to Netflix or other SVOD options. Meanwhile, other studies have found that Netflix is additive to the pay-TV bundle in general, and not a replacement.
Furthermore, Showtime says it actually grew subscribers in 2013 — to 23 million, up from 22 million a year ago. HBO’s subscriber count in the U.S. has been flat at around 28 million, but the Time Warner-owned cabler says it, too, boosted sub numbers last year (though a rep declined to release specifics). Even so, premium channels’ distribution as a percentage of total U.S. households is dropping — as is pay-TV more broadly — given that the number of American homes is increasing. In August 2013, 86% of U.S. households subscribed to cable, satellite or telco TV service, down from 88% in 2010, according to Leichtman Research Group.
NPD analyst Russ Crupnick, however, was comfortable speculating that some consumers obviously are eliminating their premium-TV subscriptions in favor of broadband-delivered video services. “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,” he said.
Netflix had 31.1 million U.S. streaming subscribers as of the end of the third quarter of 2013, up 24% from a year earlier. Netflix is set to report Q4 2013 results on Wednesday.
Author- Todd Spangler
Originally Published - Variety