17% Of Broadband Homes ‘Likely’ To Pay For HBO’s OTT

Vast Majority Already Subscribe To Pay-TV: Park Associates

HBO has not set a launch date or revealed pricing for a standalone, over-the-top service expected to launch later this year, but a research firm has already taken a stab at the size of the audience the offering might appeal to.

Parks Associates said its latest video research shows that 17% of U.S. broadband homes are “likely” to subscribe to an OTT offering from the premium programmer. Of that group, 91% are currently pay-TV subscribers and about half of them would cancel their pay-TV service after subscribing to the new OTT offering from HBO, Parks said. 

Those findings differ a bit from HBO’s predictions on how its coming standalone OTT service will impact the pay-TV market.

HBO chairman and CEO Richard Plepler has stressed that the plan  is not to cannibalize the existing pay-TV base, but to initially target about 10 million broadband-only subs across the U.S. But he also sees it as a potential way to reach the 80 million homes that don’t currently take HBO, a group that includes many homes that already subscribe to a pay-TV service.

Parks Research’s report, based on a survey of 10,000 U.S. broadband  homes taken in the fourth quarter of 2014, also found that the average viewer in those homes watches nearly 3.5 hours of OTT video each week on a TV set.

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

Although more than 40% of U.S. broadband subscribe to an OTT service, the firm doesn’t believe this means consumers are ready to abandon their TVs. 

“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,” Brett Sappington, director, research for Parks Associates, noted.