SVOD to Overtake Premium TV in U.S. This Year?

SVOD to Overtake Premium TV in U.S. This Year?

Research has showed two major trends that might be enough to push some of the premium TV channels over the edge and into the digital realm either late this year or early next. The first is the falling rate of premium TV channel subscribers. Channels that require an extra fee like HBO, Cinemax and Showtime. SVOD, as we all know is subscription video on demand a la Netflix, Amazon, etc. The two trends are heading towards each other and it will be a colossal bang when they cross.

To unseat premium TV subscriptions in the U.S., SVOD needs a mere five percent gain in households. The NPD Group reported that, in 2013, SVOD was active in 27% of U.S. households and has been steadily growing since the middle of 2012. In 2012 it was 23%, in 2013 it was 27%. It's feasible to believe that it could gain another 4% this year to hit 31%.

In regards to premium TV subscriptions, they have been falling. In early 2012 they were right around 38% of U.S. homes but, by mid 2013 they had fallen to 32%. That's 6% year roughly 18 months, even though it had a slight rise in the middle of the year, probably due to new seasons of Game of Thrones and other popular shows.

SVOD to Overtake Premium TV in U.S. This Year?

A note on the image – I added a normalized line for premium TV and extrapolated both it and SVOD forward to 2014 at current rates of change.

So here we are at 27% SVOD and 32% premium TV. With another 4% increase this year for the prior and another 6% decrease for the latter we'd be looking at 31% and 26% – a reversal of dominant platform. Even if premium TV takes just another 3% hit and drops to 29% and SVOD gains a modest 2%, they would be even and that says something about the way Americans are changing their viewing habits.

Millennials and Cord-Nevers

I also believe it speaks to the power of the Millennials who do not want to watch content on a TV but would rather have it anytime, anywhere on smartphones and tablets. Not to mention the younger generation of what are being called "cord-nevers," who never paid for pay TV, let alone premium TV and probably never will.

This could be the point that channels like HBO are waiting for to roll out a digital-only package even though many of us have been asking for one for some time. I understand that they do not want to jeopardize their relationships with the MSOs, so perhaps the digital-only could be offered through them instead of directly to customers, thereby giving everyone a piece of the pie.

Granted, consumers would much rather deal with a lower price and a direct relationship with HBO, but they probably are not equipped to handle that as even their HBO GO app, for streaming content, requires authentication with a cable provider which tells me that account management and content management are in two different places, the cable company, and HBO respectively. So HBO would need to build out a whole new business unit to accompany a digital-only, direct-to-consumers option.

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About the Author -
Christophor Rick is a freelance writer specializing in technology, new media, video games, IPTV, online video advertising and consumer electronics. His past work has included press releases, copy-writing, travel writing and journalism. He also writes novel-length and short fiction as part of Three-Faced Media . View All Posts By -

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  • Ken Fisher

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    • http://www.reelseo.com/ Mark Robertson

      Hey Ken. yeah, not a new design ;-) just a broken website but hope to have that fixed shortly.

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