Finance

Survey Predicts Hard Times for Premium Channels

4/18/2016 8:00 AM Eastern

The number of people willing to sever their premium network subscriptions to channels like HBO, Showtime and Starz is growing, just as their loyalty to subscription video-on-demand services like Netflix is increasing, a new survey indicates.

 

In the second part of Morgan Stanley’s 6th Annual Streaming Video Survey, 19% of respondents said they plan to disconnect a premium service in the next 12 months (up from 13% in 2015), while 27% said they would probably cut a premium channel (up from 22% in 2015). It was the second straight year of increases.

 

The largest number of customers wishing to cut the premium cord were those who subscribed to services that had either recently completed or are going through major mergers. Morgan Stanley said the highest intent to disconnect was found in AT&T U-verse TV (50%) and DirecTV (38%) households; telco AT&T and satellite-TV provider DirecTV Group completed their $48.5 billion merger in July.

 

Charter Communications, currently in the process of acquiring Time Warner Cable and Bright House Networks, was a close second, with 38% of Charter customers surveyed intending to disconnect premium service in the next 12 months.

 

Netflix knocked HBO off its perch as the outlet seen as offering the most quality original content, as 29% of respondents picked OTT service Netflix as having the best original programming. HBO was second, with 18%.

 

That reputation could help Netflix win more customers — in part one of the survey, 45% of Netflix members said original programming was a driver of membership, up from 34% in 2015. But Morgan Stanley noted that the number of respondents that answered “don’t know” to the original content question rose significantly, to 34% from about 27% in 2015, indicating that the “rise in OTT usage may be coinciding with a lack of clarity and perhaps growing confusion over content branding.”

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