Advanced Television

Analyst: HBO stand-alone changes landscape

October 27, 2014

By Colin Mann

boardwalk-empireHBO’s proposed cable and satellite subscription-free stand-alone OTT service is set to change the landscape of how content owners package and make available their content, according to Gavin Bridge, Director of Media Insights at Ipsos MediaCT.

Writing for the research firm’s Ideas Spotlight blog, Bridge suggests the service won’t be akin to HBO Go, the channel’s existing Internet offering only available to those with a subscription.

“There’s too much value included in that package, and I believe HBO will want to play nice with the cable providers and not get kicked out of current arrangements by tempting those currently with HBO subscriptions, albeit via 3rd parties, to switch,” he suggests.

“Instead, I would bet that it will be limited to what’s currently available on-demand via a cable subscription (current season and maybe previous season for shows, limited to seasonal windows) and a live-stream. And most likely not the full spectrum of HBO networks that a cable subscription provides, but just HBO live-stream,” he advises.

He also feels it won’t be ‘Netflix priced’. “This is HBO we are talking about, the network that charges $3.99 an episode on iTunes versus the regular $2.99. A premium brand, if not the premium brand, in US TV. You won’t be getting that for $8 a month. They have shareholders to answer to!” A “much more likely” price point of $14 is his suggestion.

According to Bridge, Cord Cutters won’t flock to it. “Although ostensibly the target market for this new offering, I have doubts that many of this group will pick up HBO Lite for $14 or so when they could keep using their pal’s password to HBO Go, unless HBO Go is going to see password restrictions,” he feels.

“HBO Go is notoriously lax for being easy on password sharing. Recently, I even heard a co-worker saying that they share out ‘our friend’s dad’s password, but we tell people don’t look at any adult stuff because it belongs to an old man’” he observes. “HBO wouldn’t go to the trouble of launching a new product, one would surmise, unless they were serious about cutting off the free access/piracy of HBO Go. Once again, go back to the shareholders. They are most likely tired of being such generous individuals, and want their money. If you consider what is happening at the larger Time Warner organisation as a whole, with buyouts and lay-offs offered at Warner Bros and Turner, and Time being spun-off, profit maximisation is the new mantra,” he notes.

“It will begin the unbundling of the cable deal, but also show the true value of these networks. Those who believe they can cherry pick networks like FX, AMC, USA or Comedy Central for $1 each are in for a rude awakening. These networks will all look at what Netflix charges for a library of 1 or 2 new shows a month plus re-runs and think that, at the very minimum, they are worth the same. At the same time, this will also show the value of owning your content, and may ultimately lead to more production studios launching their own streaming services like Sony has with Crackle. Much like HBO led the TV Everywhere charge with HBO Go, they will once again change the landscape with this announcement,” he concludes.

HBO CEO Richard Plepler, in confirming the initiative during parent Time Warner’s investor conference on October 15, said the time had come to capitalise on the growth of video viewing over the web. “That is a large and growing opportunity that should no longer be left untapped. It is time to remove all barriers to those who want HBO,” he declared.

According to Pleper, the OTT service has the potential to produce hundreds of millions of dollars in additional revenue for HBO, along with international opportunities. “This will be transformative for our company,” he said, describing the initiative as “the most exciting inflection point in the history of HBO”.

Categories: Articles, OTT, OTT, Rights