Study: Broadband signup pace tops pay-TV as consumers look for flexibility

More than one-quarter of new customers at U.S. operators are subscribing to broadband services only, a new study says, providing a snapshot of an industry undergoing a significant change, and suggesting that consumers are accelerating their uptake of streaming services.

Not only are the number of broadband-only subscribers increasing (currently estimated to be 26%), says a new white paper, but the number now exceeds the number of customers subscribing to pay-TV only, which stand at just 22%.

The white paper, from ad tech firm Marchex, pointed out that not only did the percentage of customers asking for broadband only exceed cable-only customers, close to 40% asked about paying for specific channels, indicating Americans are become more interested in a la carte, too.

Getting premium channels, HBO, Showtime and Starz, for example, were asked about by 47% of the telephone sample, Marchex said.

HBO, which announced plans for an OTT service in 2015, now says it hopes to launch by April 15; Showtime, too, has said it will launch an over-the-top service in 2015.

Starz CEO Christ Albrecht in October told investors OTT was “a tide than has to turn,” adding that it was a way to “innovate and create real value.”

Sports remains a key issue with consumers. The study showed that 1-ini-five callers asked about ESPN, for example.

According to the company, many potential subscribers balked when asked to sign three-year contracts, suggesting that operators would do better with month-to-month subscriptions a la Netflix and other OTT providers.

“Cable companies are coming face-to-face with the threat of disruption” said Chen Zhao, Marchex’s director of analytics. “Our data shows that providers need to start addressing pressing consumer demands; otherwise, they risk losing real market share when people decide to cut the cord for good,”

The pay-TV industry lost an estimated 150,000 subscribers in 2013, the first year the industry full-year losses. This year, it’s projected to again see a full-year loss. And, it’s not just lost subscribers that’s impacting pay-TV providers, it’s seeing a more significant loss in terms of penetration in the market.

The study is yet another of the many that suggest operators need to evolve their businesses by offering more content flexibility and smaller bundles that prompt consumers to use OTT options as supplemental sources of entertainment rather than as replacements.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn