Over time, product and revenue categories in the communications and subscription video entertainment business have changed. Where once it was useful to use “phone lines” as a measure of telephone company business health, that no longer is the case.

These days, with triple-play offers the norm, it makes more sense to measure revenue generating units, where a unit could be a voice, video or Internet access service.

Something like that has happened in the subscription video-on-demand (SVOD) business, which in 2005 or so referred to video on demand services sold by cable TV operators and others, as its name suggests, on a flat-fee subscription basis, rather than program by program.

These days, the definition might be different. According to the NPD Group (News - Alert), subscription video-on-demand mostly refers to streaming services such as Netflix, worth more than $3.2 billion in annual U.S. revenues, for example.

But subscription TV services offered by cable operators and others represent possibly 2 percent or less of all VOD revenues. So it is not incorrect to argue that the future of the video on demand business already is here, and it is called video streaming.

So SVOD is either an old category that now has to be repurposed, or is a product category we soon will stop tracking, in favor of newer products such as online streaming services.

In the first quarter of 2013, the number of viewers watching television shows using SVOD services increased 34 percent, year over year. But the supplier base is different. Where in the mid-2000s the suppliers were cable operators, these days the top suppliers are streaming video services, lead by Netflix, with 90-percent share of video streaming units, about four percentage points lower than last year.

In the TV content category, which accounts for 80 percent of streams, Netflix holds an 89-percent share. HuluPlus had 10 percent of TV streams in the first quarter, while Amazon Prime accounted for 2 percent of the overall TV units streamed.

“There’s no doubt that Netflix is driving the growth in SVOD, particularly with increased attention to television programming,” said Russ Crupnick, NPD SVP.

In the first quarter of 2012, 76 percent of SVOD subscribers streamed only from Netflix. In the first quarter of 2013, that figure fell to 67 percent, while 10 percent of SVOD streamers used both Netflix and Amazon Prime, and 8 percent used both Netflix and Hulu (News - Alert).  

As for “interactive TV” – which has been a virtual non-starter, and has been supplanted by use of tablets, smartphones and PCs when people are watching TV – “subscription VOD” in its original sense is a product that simply failed to get much traction in the market, and has been displaced by streaming services such as Netflix.

Product categories change. And those changes are one indicator of how the business model has changed.