Netflix and SVOD grow as premium TV declines

Subscription video-on-demand services such as Netflix have grown in popularity over the last two years as premium TV channel subscription numbers have declined, according to new research by The NPD Group.

The US study claims that as of August 2013, 27% of US internet households subscribed to SVOD services – an increase of 4 percentage points compared to March 2012.

However, over the same time period, the percentage of households paying for premium TV channels such as HBO and Showtime dipped by 6 percentage points from 38% in 2012 to 32% in August 2013.

“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 and 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 economise on their time and money spent.”

NPD’s The State of SVOD report claims that Netflix remains “the clear leader” in this space, while Hulu Plus and Amazon Prime are “reaping the biggest growth benefits” as more customers opt for secondary SVOD services.

The report also found that SVOD made up 71% of all digital-video transactions last year – growing faster than all other digital acquisition types, including individual paid rentals.