Research shows SVOD gains at the expense of premium cable channels

HBO may jump to a direct-to-consumer model sooner rather than later if the latest data from NPD Group continues to trend as it has for the past two years.

NPD today said channels like HBO, Showtime and other pay-TV premiums are steadily losing ground to online video subscription sites like Netflix, Hulu Plus and Amazon.

The researcher said that, over the past two years, premium channels have seen subscriber numbers shrink about 6%, while subscriptions lists for subscription services have increased 4%.

“As SVOD services have gained momentum, it’s clear that some consumers are trimming their premium-TV subscriptions,” said Russ Crupnick, senior vice president of industry analysis for The NPD Group. “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.”

HBO CEO Richard Plepler last week said the pay channel was prepared to offer direct-to-consumer video if “the model changes.”

Even if cord shaving is a temporary manifestation, caused, for instance, by the economy or by increasingly easy access to expanding SVOD libraries, it’s become increasingly clear that SVOD is here to stay and that consumers are likely to continue to gravitate toward it.

Netflix, for example, which reports its quarterly results this week, is expected to add another 2 million subscribers.

SVOD services now reach more than a quarter (27%) of U.S. households, HBO and other premium channels, in contract, reach about one-third (32%) of HH, NPD said.

Overall digital-video transactions rose 3 share points since 2012, reaching 70% of all home-video transactions in 2013. In 2013, SVOD made up 71 percent of all digital-video transactions, and it continued to grow faster than all other digital acquisition types, NPD said.

The NPD research is based on a survey of 7,500 consumers and data from 450,000 video transactions.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn