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New HBO CEO Hints At Standalone Streaming HBO
But Seems Unwilling to Challenge Traditional Cable Industry
by Karl Bode 08:33AM Monday Jan 28 2013
Everyone wants HBO to offer a standalone version of their streaming service HBO Go (right now you need to subscribe to traditional cable and HBO), though HBO continues to fight the idea. As the product of a lumbering empire like Time Warner, HBO isn't very good at adaptation or innovation, waiting way too long to introduce HBO Go in the first place. They're also terrified of losing the fat subsidies received from cable operators.

At an event last week, HBO's new CEO Richard Plepler responded to a question by an audience member asking about the possibility of a standalone service. The user stated they'd cut cable to reduce costs, but would still be an interested potential customer. Plepler's response? He'd help her try to get a raise, but HBO is simply too beholden to those cable operator subsidies to be willing to try and take risks:
quote:
“At the same you have to keep your eyes on your north stars, which define your business. Part of the north star reality for us is, there is billions and billions of dollars in revenues that are part of our distribution landscape, and to simply circumvent that, even though we understand there is a part of our audience which would subscribe to the network if they didn’t have to have a cable package or a satellite package, just doesn’t make business sense for us to do. Doesn’ t mean we are not mindful that the problem exists.

Every day there are people now thinking about what are the variations on the theme. How can we work with our partners to do that? Is there a broadband-only play, with HBO Go, with our partners, that might be appealing?"
While Plepler seems to suggest there's at least some internal conversations going on about such a product, it certainly doesn't sound like it's arriving anytime soon. That's good news for companies like Netflix, Amazon and Verizon/Redbox, who'll just get a further running start in a standalone streaming service sector that's an obvious inevitability.

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grydlok

join:2004-01-06
Richmond, VA

a Constant and a maybe

Constant money vs maybe money.

ArrayList
netbus developer
Premium
join:2005-03-19
Brighton, MA

Re: a Constant and a maybe

maybe money works in the stock market.
rradina

join:2000-08-08
Chesterfield, MO

Re: a Constant and a maybe

But it's always backed by a Vegas Reverse Bet derivative hedge.

saluk

@comcast.net
Stock market? Working? REALLY?

norbert26
Premium
join:2010-08-10
Warwick, RI

no skin off my butt

i lived without it all this time they don't want my money that's fine with me besides HBO is getting too over priced anyhow.
brianiscool

join:2000-08-16
Miami, FL
kudos:1

HBO

I will sign up for this service. I rather pay $10 a month then $40 - $50 more just for cable.

fifty nine

join:2002-09-25
Sussex, NJ
kudos:2

Re: HBO

if HBO is all you watch, makes sense. But I watch much more than just HBO.
mogamer

join:2011-04-20
Royal Oak, MI

Subsidies?

I'm puzzled with Karl always mentioning that HBO gets subsidies from the cabelcos. Doesn't the $16 - $20 per month sub fees cover the cost of HBO? Do regular cable fees also go into paying HBO? That doesn't make any sense.

longtimecabl

@comcast.net

Re: Subsidies?

No. Having worked in the cable industry for years and having dined with HBO reps multiple times much of their income comes in the form of say a free promotion. If you get HBO free for 3, 6, or 12 mo the cable company uses that tactic to convince people that higher priced packages are a great value (and believe me it works every time) Comcast i.e. still is paying HBO X amount of dollars for their channel. Very, very few people have HBO a la carte anymore. Typically they are part of a bundle or package that includes HBO. Their churn is pretty high since most people a la carte subscribe just for a certain show i.e Game of Thrones and then drop HBO. The cable company promos allow HBO to get recurring revenue throughout the year. i.e. Same thing would happen if it was a la carte. The risk is just too great and makes no business sense. You don't go after the pennies when you have gold bars on auto delivery. Likewise if they did not have this revenue the wild risky shows they do try that end up being amazing would never be greenlit. i.e Girls
mogamer

join:2011-04-20
Royal Oak, MI

Re: Subsidies?

said by longtimecabl :

No. Having worked in the cable industry for years and having dined with HBO reps multiple times much of their income comes in the form of say a free promotion. If you get HBO free for 3, 6, or 12 mo the cable company uses that tactic to convince people that higher priced packages are a great value (and believe me it works every time) Comcast i.e. still is paying HBO X amount of dollars for their channel. Very, very few people have HBO a la carte anymore. Typically they are part of a bundle or package that includes HBO. Their churn is pretty high since most people a la carte subscribe just for a certain show i.e Game of Thrones and then drop HBO. The cable company promos allow HBO to get recurring revenue throughout the year. i.e. Same thing would happen if it was a la carte. The risk is just too great and makes no business sense. You don't go after the pennies when you have gold bars on auto delivery. Likewise if they did not have this revenue the wild risky shows they do try that end up being amazing would never be greenlit. i.e Girls

Thanks for the explanation.
Skippy25

join:2000-09-13
Hazelwood, MO
Though your explanation is good, I think it is deeper than that.

I have seen quotes by these execs before simply stating that offering it outside of the cable subscription will lower the perceived value to the cable companies thus making them want to pay less for it. That ultimately is why they tie their product and don't want to alienate their coffers.

For HBO, it should be a wash. They offer it standalone for the same price they offer it through cable. Those that dont want cable get it and being that the cable industry doesnt believe cord cutting is happening and a threat it is a wash to them as the person didnt subscribe to cable isnt costing the cable company a thing all the while giving HBO something.
axus

join:2001-06-18
Washington, DC
Reviews:
·Comcast

Re: Subsidies?

I think he's saying the cable Cos are paying HBO during the free promotions, while the customer isn't (directly).

I'm sure there's a laziness factor, where people would drop a bunch of money on a bundle, but not bother with 10 different subscriptions direct to the content providers. The person choosing the cable subscriptions isn't always the one working to pay for it
Skippy25

join:2000-09-13
Hazelwood, MO

Re: Subsidies?

That could be, but the bottom line is that they still get a vast majority of their money from subscribers and the rate is higher because they attach an artificially escalated value to the program by staying with cable.

It is basically a you scratch my back and I'll scratch yours deal like exclusivity, but without all the exclusiveness.
silbaco
Premium
join:2009-08-03
USA

Delaying

Delaying won't help Netflix or Hulu. HBO content is for the most part exclusive.
kaila

join:2000-10-11
Lincolnshire, IL

Ten year deal w/cable....

Didn't they just ink a 10yr exclusivity deal with some of the cableco's to ensure this won't happen?
APG
Premium
join:2007-01-13

It's not going to happen, so get over it

If HBO (and TW) can figure out how to make more money with a stand along service than they'll do it. However, they can't and they never will, so please quit beating this dead horse.
silbaco
Premium
join:2009-08-03
USA

Re: It's not going to happen, so get over it

They already know how. HB Go is more than capable of standing up on its own. They just have not been willing to do it yet.

anon anon

@charter.com
said by APG:

If HBO (and TW) can figure out how to make more money with a stand along service than they'll do it. However, they can't and they never will, so please quit beating this dead horse.

Fine people, will just accept HBO's stance and go back to pirating and HBO can get ZILCH. HBO acts like people don't have OPTIONS.

Bill Neilson
Premium
join:2009-07-08
Arlington, VA

Right...so....large corporations making billions

wanting to hold off on something the consumer wants (and would pay for) just so that the consumer can over-pay on something that gives them less all the while HOPING the consumer can over-pay some MORE on EXTRA additions that provide NOTHING

Yeah!

newview
Ex .. Ex .. Exactly
Premium
join:2001-10-01
Parsonsburg, MD
kudos:1

HBO is too damn expensive

Every time DirecTV has a Free HBO Weekend, it just reminds me how overpriced and redundant HBO is.

I even got it free for 3 months once time ... and hardly ever watched it.
mogamer

join:2011-04-20
Royal Oak, MI

Re: HBO is too damn expensive

said by newview:

Every time DirecTV has a Free HBO Weekend, it just reminds me how overpriced and redundant HBO is.

I even got it free for 3 months once time ... and hardly ever watched it.

I agree and it's not just HBO, all premium channels are that way. When Dish gave Starz for free a couple of years ago, we didn't watch much, only the series. All of the movies we wanted to watch were already watched because we rented the dvd/bd earlier. Same with all the others, movies were already watched due to previous rentals. IMO, if it wasn't for the series these channels are creating, their subscriber numbers would be a whole lot lower.
Kamus

join:2011-01-27
El Paso, TX

Price...

If they did launch a stand alone service like HBO Go, I don't think it would be that successful. In a world where 8 dollars can get you so much more, i just don't see the value proposition.
I sure as hell wouldn't pay 8 dollars a month for content that is so limited compared to their competition. Maybe for a buck or two a month i'd consider it.

JimMcCoy

join:2011-08-20
Jacksonville, NC

Re: Price...

And hence therein lies the problem... customers who think that the service is only worth 1-2 dollars without consideration of cost of series production + actor salaries times the # of shows they actually show. Not to mention transmission costs, carrier fees, etc., and the fact that that they have to turn a profit (shareholders).

Someone above mentioned constant money vs maybe money which pretty much sums it up. Why go for maybe money, when you have constant money coming in. Unnecessary risk (at this point).
joeMI

join:2006-08-15
Mcmillan, MI

Stop all the redundancy!

IMO...

We don't need a HBO GO, etc. Just license it to Netflix.

Then, Netflix can add a premium content up charge to access it just like they do today if you want BluRay discs or stream+physical discs.

Why do this?

Because the devices, streaming hardware, etc. are all in place. Simplifies billing, etc.

HBO is great at creating content and Netflix is pretty great at delivering content.
--
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YukonHawk

join:2001-01-07
Patterson, NY

Re: Stop all the redundancy!

You took the words right out of my mouth!! Hey wait a minute, did I give you a license to do that!? Ha!
silbaco
Premium
join:2009-08-03
USA

1 recommendation

Problem with that is that Netflix is unwilling to raise the price or charge a premium for anyone. If Netflix did it for HBO, other content providers would want the same deal and Netflix would be up a creek.

Without a premium charge, Netflix can't pay HBO what they want. So we are stuck where we are.

anon anon

@charter.com

Re: Stop all the redundancy!

said by silbaco:

Problem with that is that Netflix is unwilling to raise the price or charge a premium for anyone. If Netflix did it for HBO, other content providers would want the same deal and Netflix would be up a creek.

Without a premium charge, Netflix can't pay HBO what they want. So we are stuck where we are.

They won't because if they did all the haters would claim Netflix is "raising" prices. They already dealt enough with that kind of bullshit before.
jdjbuffalo

join:2004-01-17
Denver, CO
I think this is a great idea and I've been saying for years!

I've been a Netflix subscriber for 4 years and I'd gladly pay $19.99 a month instead of $8 a moth for a premium tier, especially if it had great content from HBO.

They need to get it out of their head that they can only have one tier.

YukonHawk

join:2001-01-07
Patterson, NY
Reviews:
·Comcast

One big repository....

Wouldn't it be nice if we could go to one place and get all the movie and TV content we wanted for a good price? Right now you have to go to Netflix, Hulu, Vudu and PooPoo to get what you need. The overlap is just nuts!!
I know in a perfect world it would be great if all the content providers good get an equal share of the pie, but I am living in a dream world. .....and so it goes!

Dude111
An Awesome Dude
Premium
join:2003-08-04
USA
kudos:13

 

I dont blame them for fighting the idea!!! (They know all they show now is mostly GARBAGE and they dont wanna lose any $$$)
silbaco
Premium
join:2009-08-03
USA

Re:  

Game of Thrones is not garbage!

Dude111
An Awesome Dude
Premium
join:2003-08-04
USA
kudos:13

 

Well Its not like it was in the 80s i know that!
corinthos

join:2007-10-09

I'd save a lot on my cable.

I don't know on how much the subsidies from cable are but I know many people who would pay for HBO alone. Where I work some cord cutters pay other people to get HBOGO for them.

It will probably hurt the cable companies more than anything. Mine requires me to have expanded packages to get HBO. Those will be dropped. I'll take the smallest package they provide for the OTA TV and TBS. Where I live the reception sucks and I don't care to invest in a roof top antenna.
navyson

join:2011-07-15
Upper Marlboro, MD

1 recommendation

They will charge more

If HBO eventually offers HBO as a standalone unit, they will most likely charge more than what you would normally pay for it on a cable service.
navyson

join:2011-07-15
Upper Marlboro, MD

It has been many years since

I have regularly subscribed to a premium channel for a long time. I just signed up for Starz just to watch Spartacus. Got a special $6.99 a month for six months. I will cancel when Spartacus ends in April.

I basically just DVR all the movies I need when the during the numerous free previews.

clelticpride

@verizon.net

Re: It has been many years since

verizon fios does NOT have HBO in any of their bundles in southern california !! the only way you can get it is a la carte for $16? or is it $18.99 a month, unless they have a half price deal going on.