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NPD Report Snafu: A Cautionary Tale

Market-research firm NPD Group last Thursday (Jan. 23) was forced to backtrack on a press release that claimed that over-the-top providers like Netflix and Hulu Plus were gaining subscribers at the expense of premium networks like HBO, Showtime, Cinemax and Starz.

The report, dated Jan. 20, said households using the Internet increased their subscriptions to such streaming services such as Netflix or Hulu Plus by 5% percentage points from March 2012 through August 2013, while premium TV subscriptions declined by 4 percentage points over that same period.

The report was picked up by consumer and television-trade magazines and was heralded by some as another dagger in the slow death of cable television and the rise of the OTT providers.

It’s hard to argue against the fact that the streaming services — and Netflix in particular — have generated a lot of momentum in the entertainment space. In the fourth quarter, the over-the-top programmer reported that subscribership was up by 2.3 million for a total of 33 million homes.

But Showtime and HBO were ready to argue against the premium-service declines that NPD reported. Showtime officials said the report “does not accurately reflect actual subscriber counts,” while HBO said the report “is simply incorrect.”

Those claims were backed up by thirdquarter subscriber figures from SNL Kagan that showed HBO, Cinemax, Showtime, Starz and Epix all posted year-to-year subscription gains. You don’t need a statistician to tell you why the premium networks continue to attract viewers: They offer quality content that people want to see.

The outcry forced NPD to issue a mea culpa and a retraction of its report, saying “upon further examination of the results, there is data supporting the conclusion that individual subscribers are either subscribing to more channels or adding channels over time.

Media outlets, including this magazine, rely heavily on industry reports and statistics to develop stories that highlight developing trends within the television industry. What NPD’s snafu shows is that numbers and stats are not infallible and don’t always tell the whole story, even when used to illustrate a point of view that is gaining in popularity among media pundits — in this case, that new-school OTT networks are poised to take out the incumbent cable business.