New Report Examines Impact of HBO OTT Service

DALLAS: Parks Associates estimates that 17 percent of U.S. broadband homes are likely to subscribe to HBO's stand-alone OTT service, with the upcoming platform set to "create competitive challenges for all ecosystem players, including Netflix, Amazon and pay-TV providers."

The 360 View Update—Market Focus Consumer Segmentation: OTT Video Buyers report finds that of likely subscribers, 91 percent are currently pay-TV customers. Of those, half would cancel their pay-TV package if they sign up for HBO's stand-alone OTT.

“HBO picked a good time to announce its standalone HBO Go OTT service in the U.S.,” 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. 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.”

Brett Sappington, director of research at Parks Associates, added, “2015 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. 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.”

About 50 percent of U.S. broadband homes subscribe to an OTT service. “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," Sappington continued. "Everyone will need to adjust to a new way of doing business."

Hower noted, “Television is not dying, but it is evolving. 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."