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TDG: Hulu Subs Prefer SVOD to Pay-TV

2 Aug, 2017 By: Erik Gruenwedel

Whenever asked about the threat subscription video-on-demand (SVOD) poses to traditional pay-TV, Netflix co-founder Reed Hastings plays neutral, saying the two distribution channels can co-exist.

Now, new data from The Diffusion Group suggests Hulu subscribers are less inclined than Netflix and Amazon Prime Video subs to watch pay-TV. Hulu on-demand users are 37% more likely than Prime users and 29% more likely than Netflix users to select streaming services over legacy pay-TV.

Indeed, 67% of Hulu subs who also subscribe to a pay-TV service said that if forced to choose between the two, they’d stick with their SVOD services. By comparison, 52% of Netflix and 49% of Prime users said they would only opt for SVOD.

“This variance was a bit unexpected,” Michael Greeson, president of TDG, said in a statement. “One would be forgiven for thinking that Netflix dual-service users would be the segment most likely to stick with their streaming services. Given the reach of the service (100 million subs) and relative strength of the Netflix brand, it is not unreasonable to assume that the bond between Netflix and its subscribers would lead to higher numbers.”

With Hulu launching a branded online TV service, it remains to be seen what — if any impact — Hulu SVOD subs will have going forward. Much depends on whether loyalty is due to a preference for watching TV shows on-demand versus live, or due to a branded quality of experience above and beyond on-demand functionality.

If more the former, converting SVOD users to live-TV subscribers will prove difficult for Hulu. If more the latter, the chances of conversion are much higher — especially if Hulu can execute a level of integration between live and on-demand that exceeds both incumbent and virtual MVPDs, according to Greeson.

“Keep in mind that Hulu is a very different service than Netflix or Amazon Prime,” he said. “With broadcast and cable TV shows front and center in its offerings with movies playing a secondary role. This makes it a better substitute for live legacy pay-TV than Netflix or Amazon Prime.”

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