March 25, 2019
Spurred by the influx of online TV services and connected TVs, direct-to-consumer channel adoption has grown three-fold over the last three years to reach 15% of U.S. households, according to new data from The NPD Group.
DTC video subs are defined as current subscribers to any à la carte TV channel that does not require a pay TV subscription from a cable or satellite TV provider. Excludes content aggregators such as Netflix, Hulu and Amazon Prime.
While nearly 87% of DTC subscribers say they are likely to add channels in the next year – doing so to replace linear pay-TV is not among the leading reasons why.
NPD conducted a survey Feb. 6-11, 2019 of 1,000 domestic consumers, aged 18+ from diverse regions and demographical backgrounds.
A majority of DTC subs (66%) do so in addition to the traditional cable or satellite TV bundle. Low cost to entry is driving adoption and that is the top reason cited for subscribing to à la carte TV channels, with the ability to subscribe only to the channels desired.
“It is imperative for players in this space to understand where consumers prefer to sign up,” analyst John Buffone said in a statement. “Consumers can now subscribe to only the channels they want and get the benefit of a single billing vendor and user interface.”
NPD said online TV market growth will come from both current subs adding channels and new subs. Looking at the combined group of current and prospective subs with a positive likelihood to sign up in the next 12-months, the most likely destination for subscribing to online TV is Amazon Prime Channels (31%), followed by the TV channel’s app (26%).
“[Online TV] aggregators such as Amazon, Roku, Hulu with Live TV, Sling TV, DirecTV Now, YouTube TV and PlayStation Vue, stand to gain a lot by garnering subscription revenue for managing [their] channel transactions,” Buffone said.