According to the NPD Group, over-the-top (OTT) direct-to-consumer (DTC) channel video subscriptions adoption rates grew three-fold over the last three years to reach 15% of U.S. households.
NPD defines DTC video subscribers 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. It excludes content aggregators such as Netflix, Hulu and Amazon Prime.
In 2019, NPD expects growing consumer interest and new service launches to push the DTC distribution channel market to continued growth. The research house says 87% of customers that are currently subscribers indicate that they are likely to add channels in the next year.
While uptake of streaming video services is often linked to cord-cutting, subscribing directly to a channel as a means to replace cable ranks 16th out of the 20 reasons the Direct-to-Consumer Video Online Study evaluated. Some 66% of current subscribers subscribe directly to channels in addition to their cable or satellite TV bundle. Affordability is driving adoption and is the top reason cited for subscribing to à la carte TV channels, with the ability to subscribe only to the channels desired also among the top five reasons.
"In addition to what is driving adoption, it is imperative for players in this space to understand where consumers prefer to sign up. With the advent of the 'Channels Model,' consumers can now subscribe to only the channels they want and get the benefit of a single billing vendor and user interface," said John Buffone, executive director, industry analyst, NPD Connected Intelligence. "DTC channel aggregators such as Amazon, Roku, Hulu, Sling TV, and other potential market entrants stand to gain a lot by garnering subscription revenue for managing DTC channel transactions."
The growth in the market is expected to come from both current subscribers adding channels and new subscribers entering the fold. Looking at the combined group of current and prospective subscribers with a positive likelihood to sign up in the next 12-months, the most likely destination for subscribing to DTC channels is Amazon Prime Channels (31%). The second most popular choice is to subscribe directly from a given TV channel's app (26%). Prospective subscribers are even more likely than current subscribers to indicate they would use Amazon Prime Channels to sign-up.
The NPD Group Connected Intelligence Direct-to-Consumer Video Online Study is based on consumer panel research that reached more than 1,000 U.S. consumers, aged 18+ from diverse regions and demographical backgrounds. The survey was fielded from Feb. 6 through Feb. 11, 2019.