Half of pay-TV subs with HBO OTT would cut the cord

DetailsMichelle Clancy | 23 January 2015

HBO's prospects for picking up a new audience with a standalone streaming service are looking pretty good: about 17% of US broadband households are likely to subscribe to an over-the-top (OTT) video service from the premium cable net.

New Parks Associates video research finds among these likely subscribers, 91% are currently pay-TV subscribers, and roughly one-half would cancel their pay-tv service after subscribing to the HBO over-the-top service. Thus, an HBO OTT offering will create competitive challenges for all ecosystem players, including Netflix, Amazon, and pay-TV providers.

"HBO picked a good time to announce its standalone HBO Go OTT service in the US," said Glenn Hower, research analyst at Parks Associates. "The percentage of subscribers interested in OTT video services is trending upward, and more industry players are planning to launch their own OTT services."

For instance, DISH announced at CES 2015 that its OTT service, Sling TV, will include live TV such as CNN, ESPN, ESPN2, TNT, and TBS.

"Sports programming could be a major addition for standalone OTT services as sports is one of the primary reasons consumers elect to keep pay-TV services," Hower said.

The research also showed that the average head of household in a US broadband household watches nearly 3.5 hours of OTT video each week on a TV set.

"2015 is set to be the year of OTT," said Brett Sappington, director of research at Parks Associates. "Along with the new services from CBS, HBO and DISH, we expect several other players to launch or announce services in the US market in the next few months. In Canada, Rogers Communications and Shaw Communications unveiled their shomi online video service in November. In Europe, several players are starting up new OTT services to counter the entry of Netflix into their markets. Others are expanding their OTT offerings in order to reach customers both in their home markets and expatriates who want to watch programs from home."

Over 50% of US broadband households subscribe to an OTT video service, but Parks Associates analysts say this finding does not mean consumers are ready to abandon their televisions.

"Television is not dying, but it is evolving," Hower said. "Linear video comprises only a slim majority of video viewed on the TV screen at 51%, and overall video consumption has shifted to on-demand sources. The age of appointment television is coming to a close, and programming will need to adapt to an on-demand environment."