Another sign that streaming video is cutting into pay TV's market: Subscriptions to premium channels such as HBO and Showtime have fallen over the past two years, according to market tracking firm The NPD Group.
U.S. household subscriptions to premium TV channels have fallen 6 percentage points -- a decline of about 15% -- over the past two years, while subscriptions to streaming video services such as Netflix continued to climb.
Overall, about 32% of U.S. homes subscribed to premium TV channels as of August 2013, down from 38% in March 2012, The NPD Group reports. Over the same time period, streaming subscriptions rose about 16%, with subscribing homes up to 27% from 23% in 2012, the market tracking firm says.
As streaming video services gain momentum, consumers are trimming their subscriptions to premium-TV channels, says NPD's senior vice president of industry analysis Russ Crupnick. "Where the premium channels and cable in general are kind of getting hit is there's just not enough time and for a lot of Americans, the bills start to get prohibitive and you have to make choices between Netflix ora premium bundle," he says.
For many consumers, streaming video has become "an adequate substitution" for premium channels, he says, because most TV series and movies on HBO and Showtime, and cable networks like AMC, can be found on Netflix or Amazon Prime Video. "One of the trends we watching is people starting to have Hulu and Netflix or Hulu and Amazon and what impact does that have," Crupnick says.
Netflix continues to dominate the competition with 90% of the streaming market, NPD says, but that's down from 93% in 2012; Hulu and Amazon Prime Video have smaller but growing shares.
Meanwhile, pay TV providers have seen defections with overall subscriptions in the second quarter of 2013 down more than 200,000 from 2012, according to financial research firm SNL Kagan.
Perhaps adding to the effect, Time Warner has seen subscription revenue rise as its been able to charge more for HBO and other programming. To help stay the "cord cutting" and "cord shaving" trends, Comcast began offering HBO as part of a lower-priced introductory pay TV plan.
"Whether it's original programming or the gold-plated television series like Breaking Bad or Dexter, increasingly consumers are migrating toward (streaming) for that experience" Crupnick says.