Subscribers Drop HBO and Showtime for Netflix, Hulu: Study

NEW YORK (TheStreet) -- Subscriptions to premium television channels have declined over the past two years while subscription video-in-demand services like Netflix (NFLX) have been gaining market share.

According to the latest numbers from NPD Group, premium services such as HBO, which is owned by Time Warner (TWC), and Showtime, which is a unit of CBS  (CBS), and others registered a 6% decline in U.S. subscribers while customers preferring subscription video-on-demand (SVOD) grew by 4% over the past two years.

The trend is called "cord shaving" as opposed to "cord cutting," which is when users drop all services.

The report showed that in March 2012, 38% of all U.S. households were subscribed to premium TV services while 23% were paying for SVOD services. Fast forward to August 2013 and the trend changed. Premium services dropped to 32% while SVOD subscribers rose to a 27% share.

NPD said that while Netflix is still No. 1 in the category, Hulu Plus and Amazon's (AMZN) Amazon Prime gained the most from the shift to secondary SVOD services.

Overall, the survey showed digital-video transactions (what NPD terms "purchases and individual paid rentals, not including free on-demand movies and TV shows included with a pay TV subscription") rose 3 share points since 2012.

Last year, subscriber video-on-demand accounted for 71% of all digital-video transactions and continued to grow faster than all other digital acquisition methods.

NPD Senior Vice President Russ Crupnick said he believes "as SVOD increasingly strives to become a channel itself, viewers might consider it to be an adequate substitution for other premium channels, or perhaps they are switching to economize on their time and money spent."

-- Written by Gary Krakow in New York.

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