Parks Associates Report: Broadband Households More Inclined to Cancel Pay-TV When OTT Available

It’s long been the dream of some consumers that, instead of buying a package of programming that includes a whole lot they don’t want, more a la carte — and cost-efficient — solutions would become available. That’s backed up by a new Parks Associates video research study revealing that 17 percent of U.S. broadband households …   Read More

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Parks Associates Report Broadband Households More Inclined to Cancel Pay-TV When OTT AvailableIt’s long been the dream of some consumers that, instead of buying a package of programming that includes a whole lot they don’t want, more a la carte — and cost-efficient — solutions would become available.

That’s backed up by a new Parks Associates video research study revealing that 17 percent of U.S. broadband households are likely to subscribe to an over-the-top (OTT) video service from HBO — and that at least half of the 91 percent who are also pay-TV subscribers would cancel their pay-TV package as a result.

The study, “Market Focus Consumer Segmentation: OTT Video Buyers,” comes with a Q4 2014 survey of 10,000 U.S. broadband households. Among its revelations? HBO OTT is creating complex and competitive challenges for all industry players, from Netflix to Amazon to pay-TV providers.

“HBO picked a good time to announce its standalone HBO Go OTT service in the U.S.,” said Glenn Hower, a research analyst with 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.”

While more than 50 percent of U.S. broadband households subscribe to an OTT video service, the Parks Associates researchers say consumers are not poised to pitch their televisions.

“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,” explained Brett Sappington, Parks Associates’ director of research.

Hower admits TV is definitely in an evolutionary stage.

“Television is not dying, but it is evolving,” Hower said. “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.”

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