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ISurfTooMuch

join:2007-04-23
Tuscaloosa, AL
reply to buzz_4_20

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

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?