As Netflix Rises, Subscriptions to HBO, Showtime and Other Premium Nets Shrink as Percentage of U.S. Households: Report

Netflix King Monopoly

NPD finds that U.S. households subscribing to premium cable channels dropped 6 percentage points over 18-month period, while Netflix and other SVOD services grew 4 points

Is Netflix putting a dent in premium cable subscriptions? A new study suggests that a growing number of consumers are opting to pay for standalone Internet video services instead of subscribing to channels like HBO or Showtime — although the data does not prove there’s a trend.

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, households subscribing 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%.

[UPDATE: HBO, Showtime and Starz have disputed the NPD figures, calling them inaccurate. See the story here: Premium TV Networks Say NPD Study Purporting to Show Their Decline Is Hogwash.]

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. For example, a TiVo Research and Analytics study released in July 2013 found there was no significant difference in the amount of traditional TV viewing between Netflix and non-Netflix households (at least among TiVo DVR owners).

SEE ALSO: Netflix Stock Drops on Fears of Higher Costs After Ruling Strikes Down Net Neutrality

Furthermore, Showtime says it actually grew subscribers in the past year — to hit 23 million at the start of 2014, 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). Starz, for its part, said it added a net 1.2 million subs for the 12 months ended September 2013, to hit 22 million.

Even so, it’s worth noting that overall pay-TV distribution as a percentage of U.S. households is dropping. 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.

NPD’s report was based on a survey group with 7,500 respondents in households with Internet access. The company said data is weighted to reflect the U.S. population aged 13 and older.

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  1. Vickie Tate says:

    I want HBO & Cinamax. I have Showtime thru Hulu. Their charges came really fast, but for a few more $ Hulu should offer HBO & Cinamax!!!

  2. Cami says:

    i cancelled showtime when it abruptly axed The Borgias, that’s all i know.

  3. Kemble says:

    In Canada we have to take huge bundles of garbage channels to get HBO, which was only admitted to Canadian airwaves about 5 years ago. I pay $145.00 a month (which includes HS internet & 3 Movie Central channels). For that, I get a large selection of programs on demand but it falls far short of what my neighbours in the U.S. have, i.e. In Canada, only the most recent season of Californication or Shameless is on demand, but just across the border 5 seasons are available via local cable providers. I don’t have Netflix but am thinking of supplementing my cable with it because of this.

    Still, I LOVE TV and the cost for the entire month, is redeemed from my perspective, when I can enjoy one new movie, documentary or series by HBO i.e. Real Time (Bill Maher), True Blood, True Detective, The OUT List, Nurse Jackie, without having commercials and fake family values broadcast into my home.

  4. Time to evolve says:

    The price of “premiums” like HBO or Showtime in addition to the high cost of cable tv packages are more and more cost-prohibitive to the average family. Why spend close to $75 a month for a basic cable starter package and the $15 for a premium channel when you can wait 6 months and see the same show on Netflix? HBO/Showtime’s best bet would be to focus on a la carte streaming options, not just HBOGo for people who already have HBO through their cable provider.

  5. Marius Telemacher says:

    Zero TV: abandoning TV for the train-wreck it’s become and embracing other entertainment. Serial scripted and reality entertainment doesn’t exist anymore for these types (there’s still room for escapism: the occasional movie, but otherwise, it’s not about filling your shelves with DVDs or BluRays, versus curating a collection that you can watch and feel proud of, not watch and kill time with.)

    Hulu, Netflix or Amazon, again, are seen as traps, since serial entertainment requires more time that these people have, and ultimately it’s suckling on Pay TV when one wants to wean themselves off of it. If you have the time and money to pay for them, why not just go back to Pay TV?

    The reason this group scares Pay TV: they will never have an answer to placate these types; instead, it can only try to prevent people from making that choice by removing existing free viewing options (convincing Broadcast channels to delay their free viewing by a week is just the start: soon, it will be pushing people to sign in with PayTV credentials or get nothing but clips and ads). And it’s a category that is going to grow dramatically in the coming years.

  6. Karim Kanji says:

    Reblogged this on the social media age and commented:
    A new study suggests that a growing number of consumers are opting to pay for standalone Internet video services – such as Netflix – instead of subscribing to HBO or Showtime.

  7. Diane says:

    I stopped watching all the premium channels a. all the do is show the same old movies that I saw 20 years ago. Every 3-4 months is a re-hash of the same “common popular” movies of what was just shown in any current month. I like subscribe to basic netflix and have a much broader choice of movies and orher items to watch such as old tv programs that are now over that I missed and can catch up

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