According to recent research by Parks Associates, 17 percent of the broadband homes across the nation were likely to subscribe to HBO’s standalone, over-the-top service.
Out of that group of would be HBO users—the service is supposed to launch sometime this year—91 percent were currently pay-TV subscribers, and roughly one-half would drop their pay-tv service after subscribing to HBO’s new OTT service.
“HBO picked a good time to announce its standalone HBO Go OTT service in the U.S.,” said Glenn Hower, research analyst, 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. 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.”
HBO chairman and CEO Richard Plepler confirmed the long-standing rumors that HBO would launch its own streaming service in October of last year. There are roughly 80 million homes that don’t subscribe to HBO, and “we will use all measures to go after them,” Plepler previously said.
In addition to posing a threat to pay-TV providers, Parks said HBO’s OTT service would also create competitive challenges for all ecosystem players, including Netflix Amazon and other OTT services.
Parks’ research found that the average head of a household in a U.S. broadband home watched nearly 3.5 hours of OTT video each week on a TV set. Parks Associates’ Brett Sappington, director, research said “015 is set to be the year of OTT.”
“Along with the new services from CBS, HBO, and Dish, we expect several other players to launch or announce services in the U.S. market in the next few months,” he said. “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.”
While more than 50 percent of U.S. broadband households subscribe to an OTT video service, Parks’ research said that doesn’t necessarily mean a death knell for TV viewing.
“This shift to the use of OTT on the TV screen will impact the entire ecosystem, including pay-TV providers, broadcasters, cable networks, and advertisers. Everyone will need to adjust to a new way of doing business,” Sappington said.
“Television is not dying, but it is evolving,” Hower added. “Linear video comprises only a slim majority of video viewed on the TV screen at 51 percent, 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.”
The research was conducted in the fourth quarter of last year and included a survey of 10,000 broadband homes.