Are Premium Networks Keeping Pay TV Alive? - eMarketer

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Are Premium Networks Keeping Pay TV Alive?

Two-thirds of viewers interested in subscribing to premium networks online sans pay TV subscription

February 12, 2015

Cord-cutting is still more hype than reality, but will standalone streaming services offered by premium channels such as HBO and Starz change this? Based on November 2014 polling by HUB Research, these offerings shouldn’t drive an influx in cord-cutting.

Extent to Which US Pay TV Subscribers Would Change Their Pay TV Service if They Could Access Premium Cable Content Without a Subscription, Nov 2014 (% of respondents)

There’s no denying that US TV viewers love their premium channels. Among those with a pay TV subscription—89% of respondents—42% had an HBO subscription and 29% got Showtime from their TV provider. Both Starz and Encore were each used by about one-quarter, while around one-fifth had Cinemax.

Viewers also showed high interest in subscribing to premium channels online without having a pay TV subscription to that network through a cable or satellite provider. Fully 64% were interested, with about one-third of that group “very” interested.

Don’t expect to see a mass departure from pay TV any time soon, though. Just 13% of pay TV subscribers said they would drop pay TV entirely if they could get access to premium channel content without a cable subscription, and 27% wouldn’t make any changes. However, cord-shaving could take place instead. Nearly one-third said they’d keep their pay TV service but eliminate the premium channels they could access elsewhere.

Frequency with Which US Pay TV Subscribers Use Video-on-Demand (VOD) Services from Their Pay TV Provider, Nov 2014 (% of respondents)

Besides the money-saving aspect, a big appeal of online video services is the flexibility they allow—the option to watch content at a time that works for a specific viewer—and pay TV subscribers were already taking advantage of this. Nearly half used their provider’s video-on-demand service at least once a week, and an additional 10% turned it on at least several times each month.

While cord-cutting likely won’t surge, industry sources have reported drops in pay TV subscriber totals. For example, Leichtman Research Group reported that the number of US pay TV subscribers was about 95.3 million in Q3 2014—a figure that was down 148,876 quarter over quarter. Similarly, MoffettNathanson reported that the number of pay TV subscribers in the US fell 179,000 in Q3 2014.

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