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Sometime this spring — likely in April — HBO will start selling Web-only subscriptions.
And when it does, it will take a huge chunk out of the pay-TV business.
So says research firm Parks Associates, via a new survey of Internet users.
To be clear: Parks doesn’t come out and use the words “take a huge chunk out of the pay-TV business” in the summary of its research.
But if Parks’ research is accurate — and, crucially, if the people who respond to Parks’ survey actually follow through on their plans — then HBO’s new “over the top” service will end up costing the pay-TV business around 7 million subscribers. That’s 7 percent of the industry’s base, vaporized.
Here’s how that (theoretically) works:
- Parks says its survey of 10,000 broadband users finds that 17 percent of homes with high-speed Internet say they’ll subscribe to HBO’s Web subscription service when it launches. There are at least 88 million households with broadband in the U.S. So that’s a pool of 15 million subscribers.
- Parks says 91 percent of the broadband users who say they’ll subscribe to HBO on the Web also have pay-TV subscriptions today. That’s 13.6 million subscribers.
- And Parks says half of those pay-TV subscribers say they’ll cancel their pay-TV subscriptions once they can get an HBO-only package. That’s 6.8 million subscribers, vaporized.
Again, the main caveat here is that announcing that you’re going to stop paying for cable TV is like announcing that you’re going lay off dessert or head to the gym three days a week. It could happen! But saying it doesn’t make it so.
It’s also possible that people who participate in Parks surveys have literally no idea what they’re talking about, are drunk, or believe they’re in an alternate universe.
First data point in support of that argument: I don’t believe that HBO, which has done its own market research, thinks it will attract anything close to 15 million subscribers for its Web-only service. (An HBO rep declined to comment.)
Second data point in support of that argument: More than 10 percent of Parks respondents say they’re interested in subscribing to the recently launched CBS subscription service, which gives you access to shows you can already see for free. Even CBS CEO Les Moonves, who doesn’t hold back when it comes to superlatives, modestly positions this one as something that will appeal to “super-fans” — not eight or nine million people. So let’s assume the Parks numbers have some helium in them.
Still! Even if a fraction of the people in Parks survey follow though, this could be a big problem for the pay-TV business, which has so far held on to its subscriber base, even as the talk of cord-cutters and cord-nevers gets increasingly persuasive.
Put it this way: If just 20 percent of Parks’ theoretical cord-cutters become real cord-cutters, that’s more than a million pay-TV subscribers gone — or more than four times the industry’s biggest annual loss.
Parks’ research is inconvenient for HBO and parent company Time Warner Inc., who have been arguing publicly and privately that HBO’s Web only option won’t shrink the pay-TV business.
Their theory: Selling HBO on the Web gives them a chance to add subscribers, from a pool of 10 million to 12 million people who have broadband but not pay TV, and no one who’s getting pay TV today is going to dump it in favor of a Web-only option.
My hunch is that the answer is in the middle: Most people who have pay TV will keep paying for pay TV, because change is hard, and most people don’t like to do hard things when they watch TV. They just want to watch TV.
But HBO on the Web — especially in conjunction with the growing number of other Web video services, like Dish’s new Sling TV — will be attractive to some people as a pay-TV alternative, either because of economics (even if you only save a few bucks a month, that’s still a few bucks a month) or ideology (why should you pay for stuff you don’t want, if you don’t have to?).
And I think those numbers are going to increase over time, whether the pay-TV guys want to admit or not.
This article originally appeared on Recode.net.
