Consumers Forgoing Pay-TV For Internet Services

Consumers are looking to on-demand video programming more and more, but the pay-TV operators who generally control those offerings may be facing some disruptive challenges in the near future.

According to The NPD Group, video-on-demand revenues from pay-TV services hit $1.3 billion last year, with 15% of consumers age 13 or older having used the services at least once in the 12-month period between August 2010 and August 2011. All told, there were about 40 million users of video on demand during that 12-month period, according to NPD (formerly National Purchase Diary.) However, a competitive set of Internet video-on-demand options is growing at a healthy clip as well. Revenues from Internet video-on-demand hit $204 million last year, and the channel (which includes offerings from iTunes, Amazon, Vudu and others) hit seven million users by August 2011. According to NPD, one out of every six (16%) paid video-on-demand movie rental transactions were attributed to Internet sources in 2011.