Parks on HBO cord-cutting worries: Don't panic

Smoothing down fears that 7 million consumers might cancel their pay-TV subscriptions this year once HBO launches its over-the-top subscription service, Parks Associates added a bit of context to its initial report. The gist? Don't panic…yet.

"A significant amount of attention has dwelled upon the potential for cord-cutting that an HBO OTT service might drive," wrote Glenn Hower, Parks research analyst, in a follow-up blog post.

Parks circulated a study in January that indicated 17 percent of the 10,000 broadband households surveyed for the report were likely to subscribe to an OTT service from HBO, once it became available. About half of that 17 percent, or just under 8 percent of the survey sample, said they might discontinue pay-TV services as well.

While noting that losing 8 percent of U.S. broadband customers--or about 7 million according to current subscriber numbers--would be "catastrophic," Hower said this is not likely to happen, for a number of reasons.

For one, HBO is not the sole deciding factor in cutting the cord, he noted. "Although half of those that would take HBO's service stated that they would also cut the cord, only a small portion would exclusively take HBO and then cancel pay TV."

He also pointed out that there's often a disparity between a consumer's intention and their behavior--talking the talk versus walking the walk, so to speak. Further, broadband consumers surveyed were expressing sentiment more than intent. "Clearly, a significant number of consumers are frustrated with the current pay-TV model and are open to other options. Still, consumers are responding to proposed services (excepting CBS All Access, which is currently available) rather than ones that are actually present in the market."

A few OTT services are preparing to launch widely this year--Dish Network's (NASDAQ: DISH) Sling TV is in limited, invitation-only release for at least a few more weeks, for example, and over-the-air streaming device Tablet TV is only available in San Francisco for now. But until these and other compelling streaming services are easy to access, subscribers may not be as eager to cut the cord as pay-TV operators fear.

Parks Associates cord cutting vs cable

For more:
- see this Parks blog post

Editor's Corner: SlingTV could be the tipping point for a cord-cutting stampede

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