While pay-TV providers are breathing a collective sigh of relief that cord cutting has not (yet) emerged as a significant threat, the recent news that Netflix now surpasses HBO in domestic subscriptions is a warning shot across the bow for premium channel providers. This announcement cannot help but intensify concern that OTT subscribing may lead not to cord cutting but to cord shaving. The latest Evolution of Video data suggests that these worries may indeed be well-founded.
At first glance, the data look encouraging for pay-TV providers and premium channels alike. In the first quarter of 2013, 84% of Netflix subscribers also had a pay-TV service. Among those dual Netflix/pay-TV subscribers, 54% had a premium channel and 37% had HBO. The outlook becomes darker when previous premium channel subscribing is considered. Of all Netflix/pay-TV subscribers, 26% shaved HBO from their pay-TV subscription at some point and now have no premium channels.
Are Netflix and other OTT subscription services a becoming a viable replacement for premium channels? Centris will continue to monitor these trends to assess the ongoing impact of Netflix, and OTT subscribing in general, on cord shaving.