Today HBO’s CEO Richard Plepler announced that they’d offer some form of HBO service in 2015 that doesn’t require a cable subscription. From Re/Code:
Plepler said the company will go “beyond the wall” and launch a “stand alone, over the top” version of HBO in the US next year, and would work with “current partners”, and may work with others as well. But we wouldn’t provide any other detail.
This is what we’d call “kind of a big deal.” It’s big enough to make my head spin a little bit, so I’m going to share my thoughts in a non-“prose” fashion. So in no particular ordering, my thoughts (mostly questions really):
“Could this be the death of Pay TV as we know it?” Yes, this could easily be the canary in the coal mine. If HBO “fully” unbundles, then the combination of Netflix+Hulu+HBO as (non-sporting) Pay TV Alternative is pretty compelling. And if it works, then it’d be easy to see ESPN and others follow suit. Which then takes us to unbundled TV – and probably higher overall content costs, but a lot fewer junky channels to watch.
“What exactly are they going to offer?” I highly doubt the Unbundled HBO offering will be the exact equivalent of the current HBOGO product/service. My bet’s on a library similar to what you can find in Amazon Prime.
“Is this for the masses?” About 30-odd-million US households have HBO. That leaves 80mm as the opportunity ahead. So do these folks not have HBO today because of price, interest, accessibility, catalog, other? Curious.
“This could have no impact on Pay TV after all.” Before we run off and say Comcast and Directv are ruined here, let’s go back to that 30 million HBO subscriber number. Does it *really* drop in a meaningful way? I could easily see this as a non-predatory move.
“But then again, what about cable-delayers?” We’re clearly seeing the adoption of Pay TV shift from something 22-year-olds do when they get their first apartment to something done later in life (long term impact of this is still TBD). It’s really, really hard to go FROM a full Pay TV lineup to an all on-demand/a la carte one. But the reverse isn’t true – if you have never had 500 channels, you don’t know what, if anything, you are missing. And with an HBO service available without Pay TV, maybe this impacts that delay even more.
“How will it price-compare to iTunes and Netflix?” If I were to buy the shows I already enjoy on HBO from iTunes, it’d cost me roughly $60 this year (Game of Thrones and Silicon Valley), or $5/mo. But if I were a larger consumer of their content, let’s say 6 original shows per year, that’d be roughly $15/mo. I’m not even using any new math to figure that all out – which means anyone/everyone can do the same. Would I spend more than that for full HBOGO access today? I don’t think so, because any price point above $10-15/mo is going to cause me, and others, to do math. Which turns out to not be that hard to do. Obviously with an unknown product offering, this is hard to speculate, but again – I’m curious.
“What does Comcast think?” While I don’t know the intricacies of the distribution terms between HBO & Comcast, I do know that, for the most part, Comcast tends to have a “most favored nation” type of clause. This is what’s historically prevented new offerings (Intel Media?) from actually competing in the market, since “nobody” can get better pricing than them for a given channel. So *something* exists between HBO & Comcast to enable this new service – wondering what that looks like.
“What if there’s more to the story in terms of distribution/devices?” Maybe this is an all-Amazon deal, and Prime subs get even more HBO, and that’s it? Or if it’s unique to iPad owners? Or is only on Samsung Smart TVs? Or Google Fiber? I don’t really think any one of the above is on the money, but there could definitely be other players involved here. Further, I’d muse that this is a distinctly “not available on a TV set or connected TV device” offering – but I could even be wrong on that too.
“What if it does actually still require cable?” It’s very hard today to subscribe to basic cable + HBO in all markets. What if this is a move that requires *some* kind of cable subscription, but then unlocks the full HBO service? This would still fit in the description Mr Plepler outlined earlier.
Add your thoughts to the comments below. And for no particular reason, the Game of Thrones theme sung using nothing but Peter Dinklage’s name:
Unbundling is how to get the best for less.
Bundling is how to get the most for less.
Coca Cola in the U.S. generates far more revenue from 12 oz cans of Coke or 20 oz plastic bottles of Coke than 8 oz classic glass bottles of Coke.
HBO seems to want to learn from Coca Cola’s approach to the market.
I don’t drink Coke any more, nor do I subscribe to HBO any more. And I turned in my set-top box to Comcast at both of my two residences in the past year. Do not generalize from my sample of one.
I was elated to hear that HBO was stirring the waters yesterday.
I believe Timothy Wu in *Master Switch* describes what I least like about Comcast and why cell phone service in the US is less costly than anywhere else in the world.
You are right about not being able to know what is actually up with HBO based on this announcement. Original programming is about monopoly, which Peter Thiel in *From Zero to One* posits is the unique path to profitability.
We will no doubt learn much more in the months ahead, though whether we will profit on the consumer side following HBO’s announcement yesterday remains, as you explain, still hidden this morning.