NPD: Consumers Seeking Pay-TV Alternatives for Home Entertainment9 Nov, 2011 By: Erik Gruenwedel
Consumers are increasingly melding – not supplanting – subscription video-on-demand services such as Netflix, Hulu and YouTube with cable, satellite or IPTV platforms for movies and TV programming, according to new research data from The NPD Group.
Among U.S. cable, satellite and IPTV subscribers, 27% also subscribe to Netflix, while almost half (46%) also pay for a premium movie channel or sports channel. Nearly a quarter of television-service subscribers (24%) watched movies via both paid and free VOD from their providers. Comcast led other companies in the percentage of their subscribers who use VOD (41%), followed by Verizon (38%), and Time-Warner Cable (20%).
The data was gleaned from a July and August online survey of more than 10,000 respondents.
The well-documented surge in SVOD use coupled with ongoing declines in premium video subscriptions among cable and satellite providers — a practice known as cord-cutting — should only be applied to a minority of pay-TV subscribers, said Russ Crupnick, entertainment analyst with NPD. Indeed, 73% of respondents who used Netflix, streamed video for free, or who paid for Internet-video downloads and rentals, also have a cable, satellite or IPTV subscription.
“There may be too much emphasis on so-called ‘cord cutters’ who represent a small group, as opposed to potential ‘cord throttlers,’ who are a massive segment of the subscribing population,” Crupnick said. “Even though many consumers are paying for more content from their TV-service providers in the form of premium channels and video-on-demand, there's still quite a lot of alternative video downloading and streaming activity going on.”
The survey found that TV network websites remain the most popular destination for free repurposed episodic programming, with 10% of pay-TV subscribers also streaming free access to movies and TV shows. Also, the viewer of VOD and SVOD programming is five years younger (37) than the average cable viewer.
“Most movie and TV viewers who use [VOD, SVOD] options also subscribe to cable TV, satellite TV, or IPTV services, where VOD and premium channels represent high margin add-ons,” Crupnick said.
He said these so-called over-the-top (OTT) video services (which operate on cable/satellite broadband connections into the home) provide operators with an opportunity to bond with their customers and gain more revenue per user, or ARPU.
“If the programming and user experience aren’t on par with digital alternatives, operators could find themselves increasingly sharing their customers with Netflix or other OTT services, like Apple TV and Roku,” Crupnick said.