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buzz_4_20

join:2003-09-20
Limestone, ME
Reviews:
·ObiVoice
·Pioneer Wireless

I'm not dumb, but I still don't understand

1. Expand Customer Base
2. Charge $9.99 a month for HBO Go
3. Sell Direct to Consumer

Where's the can't make a profit part come in.

There are tons of people that would buy this. After paying for cable and internet most don't want the added cost of HBO.

There are many that don't have cable and don't want to pay all outdoors for the cable package just to add more on top to watch a few shows on HBO.

Really, I don't understand the logic here.

If the legal method is easier than piracy and reasonably priced it will work.

Look at hulu+ that is way easier than have to torrent a show, then find a way to play it on your tv. All you have to do is pick up your remote and it works.

Os

join:2011-01-26
US
Reviews:
·Comcast

1 recommendation

The real question here through all this is what the cable companies are paying HBO per subscriber.

We've seen those charts that outline the subscriber fees for each cable channel, but they never show HBO, Cinemax, Showtime costs.

Considering how many promotions exist for "3/6/12 months free" of these channels, it suggests to me that there is a massive markup that the people who pay retail subsidize the promos, and that there's so much margin that they can handle that business model.

Here, Atlantic Broadband charges $19.95 per month for HBO. That does not include any West Coast feeds, does not include HBO Comedy or HBO Zone, and only includes HBO HD and HBO2 HD (which is more than any Comcast subscriber in MD can say they have). However, even if I paid for HBO (I don't), I would STILL not receive access to HBO GO as Atlantic Broadband doesn't have a deal with them. That's the real injustice. I can be a paying customer and STILL be locked out of the content.

But I think it shows the real rate HBO gets of that is maybe $5-$6 month, and considering the cost of Netflix, I could easily see charging $10 for the movie and original show library as not only being popular, but profitable, moreso possibly than the cable model.


buzz_4_20

join:2003-09-20
Limestone, ME
Very True. I'm sure the CableCo is kicking plenty of cash towards them.

I don't think they see just how many customers that they could have by opening up to everyone.

Os

join:2011-01-26
US
Reviews:
·Comcast
You misunderstand me. I totally agree with you.

My point is that the real price of HBO that the cablecos pay them is substantially less than that retail price point due to all the promos.

It would just be great to have the transparency of the real cost of the premium movie channels compared to the cable channels. I'm not entirely convinced HBO gets more per subscriber than ESPN.


buzz_4_20

join:2003-09-20
Limestone, ME
Slowed down, re-read...

I see your point clearly.

That makes even less sense for them. They would get 100% of the sales instead of whatever they get for the CableCo during negotiations.

mogamer

join:2011-04-20
Royal Oak, MI
reply to Os
said by Os:

The real question here through all this is what the cable companies are paying HBO per subscriber.

We've seen those charts that outline the subscriber fees for each cable channel, but they never show HBO, Cinemax, Showtime costs.

Considering how many promotions exist for "3/6/12 months free" of these channels, it suggests to me that there is a massive markup that the people who pay retail subsidize the promos, and that there's so much margin that they can handle that business model.

Here, Atlantic Broadband charges $19.95 per month for HBO. That does not include any West Coast feeds, does not include HBO Comedy or HBO Zone, and only includes HBO HD and HBO2 HD (which is more than any Comcast subscriber in MD can say they have). However, even if I paid for HBO (I don't), I would STILL not receive access to HBO GO as Atlantic Broadband doesn't have a deal with them. That's the real injustice. I can be a paying customer and STILL be locked out of the content.

But I think it shows the real rate HBO gets of that is maybe $5-$6 month, and considering the cost of Netflix, I could easily see charging $10 for the movie and original show library as not only being popular, but profitable, moreso possibly than the cable model.

Like you mentioned, taking into account all of the free and other promos (Dish was offering all of it's premiums at half off for 6 months) plus the free weekends every other month that HBO/Cinemax have. There must be a tremendous mark-up for the pay-tv providers. I bet a $9.99 stand alone HBOGO would be just as, if not more profitable per sub, for HBO as the current model is.

The biggest problem is that most isp's also sell tv packages. Those guys wouldn't stand still with losing one of their big cash cows.

And boy, is Atlantic Broadband ripping people off. That's the most expensive pricing I've seen for HBO. And you're getting the bare minimum too.

Zoder

join:2002-04-16
Miami, FL
reply to Os
Comcast's appointment guarantee says that if the tech is late you either get a $20 service credit or 3 months free of a premium channel.

So $6 a month cost to the cable company sounds about right.


skuv

@rr.com
reply to buzz_4_20
said by buzz_4_20:

1. Expand Customer Base
2. Charge $9.99 a month for HBO Go
3. Sell Direct to Consumer

Where's the can't make a profit part come in.

Where's the rest of your cost analysis on this? Do you know the costs involved to make nearly every HBO show and multiple movies available for streaming?

Your list is a lot more simplified than it should be.

Maybe they could make a profit. But your list certainly doesn't show how.

ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
reply to buzz_4_20
There may be more than price-per-sub going on here. Yes, HBO stands to make more selling HBO Go directly, but they're probably afraid of the backlash from the cable and satellite companies if they do that. First, we assume they could make more per sub going the direct route, which they likely could, but it's also important to note that those of us who post here are far ahead of the curve in terms of being broadband-savvy. Most people still get their TV through cable or satellite. That means the market for direst sales, while growing, still isn't that big yet. You then also have to consider how the cable companies would respond. They'd likely say that offering this programming direct is lowering HBO's value, so the cable and sat companies would want to pay less per sub. Essentially, that's the argument Dish is making with AMC, and you can believe that the Time Warner execs are paying attention.

I also think there's another issue at play: if HBO offers its programming direct to broadband subs, it would serve to validate that kind of delivery model. Once that happens, the perceived barrier to entry into delivering first-run TV shows via broadband just got way lower, which means others may try, skipping cable and satellite altogether. That's bad for HBO because they'll then have to compete against these new entrants. Granted, newcomers aren't going to have the same level of programming, at least not at first, but they'll still chip away at subs. And, if you're a programmer, which would you prefer: a walled garden controlled by a company you've done business with for decades, where you're already established and face limited competition, or a more open ecosystem, where you can sell directly but are open to competition from anyone else who can set up shop?

Os

join:2011-01-26
US
Reviews:
·Comcast
reply to mogamer
The only suites of premium channels we get the full slates of are Starz/Encore, and that's because they're included with the Digital Plus package (The only digital cable package ABB has).

For Cinemax, we only have Cinemax, MoreMax and ActionMax and it's an additional $16.95 per month from the HBO.

We only have Showtime, Showtime 2, Showtime Showcase, Showtime Extreme and Showtime Beyond, which is all Comcast Mid-Atlantic carries too.

Atlantic Broadband is merely Charter's leftovers that they deemed non-strategic in 2004. All of the territories in MD and Western PA were deemed non-strategic by AT&T when they acquired TCI, and dealt to a shell company that was purchased by Charter within 6 months. We did get D3 speeds last week available here, and those are competitive (20/2 for $54.99, 40/3 for $69.99).

But there's a reason ABB is for sale. And I didn't even mention all the cable channels we can't get, including one of our in-market regional sports networks, Comcast SportsNet Mid-Atlantic.

keenan424

join:2003-01-13
Santa Rosa, CA
reply to Os
said by Os:

The real question here through all this is what the cable companies are paying HBO per subscriber.

As of about a year ago, HBO receives $6 per subscriber from their carriers. Starz charges $2.50 while Showtime charges $2.00.

Os

join:2011-01-26
US
Reviews:
·Comcast
Now is there any sort of discount to the providers for not providing all the feeds? If there isn't, then why don't they? It's not like additional SD channels eat up any significant bandwidth.

It looks like my intuition was right. There is no doubt knowing that $6 figure that a Netflix-like HBO standalone service can make money, and can be opened up to a wealth of new customers. The days of needing the middlemen (cablecos and satellite) are over, the only things holding us back are not the technology, but the protection of legacy revenues both through regulations, caps/overages and sweetheart deals.

I actually think the one who could shake things up might not be HBO, but Epix. It's got the backing of Viacom, and doesn't receive the advantages of carriage. Comcast, TWC and DirecTV won't touch it. It's also got a large online component, and I believe some content sharing still with Netflix.

Should it exist? Probably not. It only came to be due to the CBS/Viacom split (Showtime going to CBS). But to expect the rascal in the room to be the industry standard might be too optimistic.

elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink
reply to buzz_4_20
said by buzz_4_20:

Slowed down, re-read...

I see your point clearly.

That makes even less sense for them. They would get 100% of the sales instead of whatever they get for the CableCo during negotiations.

100% of the sales and 100% of the headaches, dealing with consumers, as well as having to deal with IP delivery issues.

Its a lot easier for the boardroom to understand bulk contract sales at $60/household-year via cable and satellite, than try to calculate the rents from 10 million individual monthly IPTV subscriptions.


buzz_4_20

join:2003-09-20
Limestone, ME
So, keep digging in heels leaving potential consumers with no legal alternative to get your content... Seems like a sustainable model.


fifty nine

join:2002-09-25
Sussex, NJ
kudos:2
reply to buzz_4_20
said by buzz_4_20:

1. Expand Customer Base
2. Charge $9.99 a month for HBO Go
3. Sell Direct to Consumer

Where's the can't make a profit part come in.

Make it $20-$25/month. HBO will probably want that kind of number.

keenan424

join:2003-01-13
Santa Rosa, CA
They will, Time Warner have already stated that for Netflix to carry HBO content the Netflix subscriber cost would need to go up to about $20 per month(for streaming alone).


88615298
Premium
join:2004-07-28
West Tenness
reply to buzz_4_20
said by buzz_4_20:

So, keep digging in heels leaving potential consumers with no legal alternative to get your content... Seems like a sustainable model.

Yep a cord cutter is not going to pay $1000 a year to get HBO if he can just pirate the show even if he knows it's wrong. Most of the same "pirates" WOULD pay say $15 a month for HBOGo. $1000 year = worth pirating. $180 a year = not so much.


Simba7
I Void Warranties

join:2003-03-24
Billings, MT
reply to skuv
said by skuv :

Do you know the costs involved to make nearly every HBO show and multiple movies available for streaming?

As simple as copying a file to a server. It's not that incredibly hard.

Most of the files are digital anyway when the shows are being transmitted to the carriers. Do you think any of the providers still use video tape?


88615298
Premium
join:2004-07-28
West Tenness
reply to keenan424
said by keenan424:

They will, Time Warner have already stated that for Netflix to carry HBO content the Netflix subscriber cost would need to go up to about $20 per month(for streaming alone).

And I would pay $20 for Netflix if it had current season HBO stuff and/or more newer movies. Unfortunately Netflix has seemed to have gotten comfortable with just offering it's "nothing but old shit" catalog. Raise the price to $10 offer a "premium" tier for $10 more then use that extra cash to offer newer content.

Sammer

join:2005-12-22
Canonsburg, PA

1 edit
reply to Os
said by Os:

I actually think the one who could shake things up might not be HBO, but Epix. It's got the backing of Viacom, and doesn't receive the advantages of carriage. Comcast, TWC and DirecTV won't touch it. It's also got a large online component, and I believe some content sharing still with Netflix.

Should it exist? Probably not. It only came to be due to the CBS/Viacom split (Showtime going to CBS). But to expect the rascal in the room to be the industry standard might be too optimistic.

Considering that CBS and Viacom are still controlled by the same Redstone family that controlled them when they were together I doubt the split had much to do with Epix. It probably had more to do with Showtime's inability to renew contracts with Lionsgate and MGM who are Epix joint venture co-owners with Viacom.

elray

join:2000-12-16
Santa Monica, CA
Reviews:
·Time Warner Cable
·EarthLink
reply to buzz_4_20
said by buzz_4_20:

So, keep digging in heels leaving potential consumers with no legal alternative to get your content... Seems like a sustainable model.

Its quite sustainable.
The average American Household is not going to cut the cord.

Until broadcasters and networks buy out the caps and throttling and assure us of 2K streaming speeds, until the IPTV / OTT STB can be purchased at Best Buy cheap and doesn't have Moto-like bugs, and until the audience affirms its willingness to pay MORE for ala-carte IP delivery, HBO et al will go with the business model they know.