Furious spending on original programming – coupled with large libraries of licensed content – seem to be paying off for subscription video-on-demand (SVOD) services and other online sources. In fact, these are now becoming the viewing destinations for a majority of viewers’ favorite TV shows, according to Hub Entertainment Research’s Conquering Content report, which notes that this is the first time that online sources have overtaken the set-top box (STB).

As part of its survey of more than 2,200 US TV viewers ages 16-74 (all of whom have broadband at home), Hub asked respondents how they watch their favorite show. This year a majority said they watch it through an online source (52%) as opposed to a set-top box (48%). Just 3 years ago, the numbers were 2:1 in favor of set-top box viewing, such as live TV, video-on-demand or DVR.

As the predominant SVOD service, Netflix is making its own gains. Previous research from Hub demonstrated that it is becoming the default source of TV viewing for a sizable share of video viewers. This newest study shows that is has virtually caught up with live TV as a destination for viewers’ favorite shows: 31% watch their favorite programming on live TV, compared to 29% who do so on Netflix.

Just 3 years ago, live TV was favored by a 3:1 margin over Netflix as the source of viewers’ favorite shows.

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Original Content Only Becoming More Important for SVODs

Fully two-thirds of respondents this year subscribe to at least one of the big 3 SVOD services: Netflix, Amazon and/or Hulu. And as has been detailed several times in recent research, a greater number are subscribing to multiple services – in fact twice as many as in 2014 (36% and 18%, respectively).

Research from YouGov suggests that viewers will subscribe to TV services such as Netflix in order to watch specific programs – and a new study from Magid also reportedly finds originals to be the driving force in subscription decisions.

In order to “feed the beast,” streaming services are investing in ever-increasing amounts of programming: Hub cites research indicating that they’ve produced 22% more scripted series this year, compared to an 8% rise from broadcast networks and a 1% increase from basic cable.

For its part, IHS Markit details a 2.3% compound annual decline in scripted hours in the US from broadcast network and cable over the past 3 years, with online services instead soaring with a compound annual growth rate of 53% in scripted hours over that time span.

All of that is translating to a heightened importance placed on original content for SVOD subscribers: 1 in 3 now say they watch originals most frequently on Netflix and Amazon Prime.

Amazon Prime seems the most dependent on originals, per Hub’s report: 61% of respondents said they might or would definitely drop their subscription if it stopped producing original content, compared to 30% for Netflix.

Among non-subscribers, more than one-quarter say that originals make them more likely to subscribe to the big 3 services. And among subscribers, healthy majorities – particularly for Netflix (74%) and Hulu (67%) – say that original shows make them more likely to keep their subscription.

Other Findings

Other highlights from Hub’s report follow.

Viewers who watch shows on pay-TV are far more likely to find out about programming through advertising than from word-of-mouth. The opposite is true for shows watched via online sources, which tend to gain more from word-of-mouth. Research indicates that these are the two leading methods of finding video content overall.

Almost 6 in 10 (57%) viewers report having found a show online and then later watching it on regular TV, with this being up from 51% in 2014.

More viewers sit down to watch TV with a specific show in mind than to find something they don’t know about but might enjoy. Younger viewers, however, are more likely to browse than to search for a specific show.

Almost 3 in 4 viewers agree that more of their total TV time now is spent watching shows they really like, and half agree that there are more good TV programs to choose from today than in the past.

However, it’s possible that there’s too much of a good thing: roughly half also agree that there are so many programs to choose from that it’s hard to know where to start. Perhaps as a result, 45% are more likely to choose TV sources that make it easy for them to discover new shows that they’ll like. This has been traditionally an area of strength for SVOD services rather than pay-TV.

The report’s executive summary can be downloaded here.