HBO's Web Offering Could Shave 7 Percent Off Pay TV's User Base: Study

HBO's Web-only service could eradicate 7 percent of the pay-TV user base when it debuts this spring, according to a survey released Thursday by the research firm Parks Associates. About half the people interested in the service, which will allow users to subscribe to HBO directly, say they will discontinue their paid TV subscriptions once it becomes available.

“HBO picked a good time to announce its standalone HBO Go service in the U.S,” Parks Associates research analyst Glenn Hower said in a statement accompanying the research. HBO Go is already available as a standalone offering in parts of Scandinavia.

As a percentage of the total population, the number of people interested in HBO’s Web-only offering is relatively slim, just 17 percent, according to the Parks survey. Yet if half of that population does in fact decide to cut its cords, it will still dramatically shrink the overall size of the pay-TV market.

It could also cause a domino effect. According to separate research conducted by the Diffusion Group, about 15 percent of all pay-TV subscribers are, at any given time, considering getting rid of their cable TV subscriptions for so-called "over the top" or OTT services which bypass the cable box.

“This shift to the use of OTT on the TV screen will impact the entire ecosystem,” Parks Associates’ Director of Research Brett Sappington said. As more and more people, especially the young people who are ambivalent about subscriptions already, grow accustomed to the idea of paying for smaller bundles of content that can be accessed on any number of devices, we could see change continue.

The Parks research suggests that the average head of household in a home with broadband access watches more than three hours of Web content through the television set, and that over half of all U.S. broadband households already subscribe to at least one Web content service such as Netflix. Many of them are likely holding onto their cable packages because it still represents the only way for them to get certain kinds of content.

As those conditions begin to change, how will the pay-TV providers react?

“Everyone will need to adjust to a new way of doing business,” Sappington said.