Re/Code, reporting on a new survey from Parks Associates claims that the coming HBO streaming service could lead to 6.8 million Americans ditching pay TV. For the moment, let's excuse the fact that pricing or other details of the HBO service have yet to be announced (the survey appears to have assumed a $15/month price tag). This survey highlights a problem for the pay TV providers and TV networks. According to my own research, the average pay TV bill in the US is about $85 per month. That means for every 1 million people that cut the cord the cable industry loses about $1 billion in revenue per year, a large portion of which will go straight to the bottom line. Cable operators run a very capital-intensive business with a lot of fixed costs. Said another way, if someone on your block cancels their TV the cable company still has to maintain the lines running to all of the other houses. The cable company is making less money to do essentially the same amount of work. (The TV networks face the same problem since they will make less money from advertising and future subscriber fees.)

The pay TV system in the US has been on an unsustainable course. The average bill has gone up 63% in the last decade, but consumers are given no choice between a full-priced bundle and a basic package of a dozen or so channels. The whole system may be one big house of cards ready to come tumbling down when the pillars such as HBO and ESPN are liberated from the bundle. It will be very interesting to see how Dish's Sling TV, Playstation Vue, HBO, and other standalone or 'skinny bundle' services perform.