Most New HBO, Cinemax Additions Were Just Free Trials
You might recall recently that HBO and Cinemax complained intensely
about a recent NPD Group study suggesting they were losing subscribers. The premium cable operators protested by noting that the companies actually added 1.9 million subscribers on the quarter, two-thirds of those for HBO. Time Warner broke out the specific earnings for HBO this week for the first time ever
, in order to highlight the fact that HBO generated $1.3 billion in revenue in the last quarter of 2013, and $4.9 billion for the year.
While certainly healthy earnings, also embedded in that report is the fact that the majority of those 1.9 million subscribers added by HBO and Cinemax were non-paying customers:
In 2013, HBO and Cinemax added almost 2 million subscribers in the U.S., which was the highest increase in 17 years, he said...But according to Time Warner, most of those subscriber gains for HBO and Cinemax in the U.S. were not “revenue-producing,” meaning the pay-TV affiliates kept 100% of the fees from subscribers for those services.
In other words, the customers were just testing out trials provided by cable operators. Meanwhile, Netflix continues to nip at HBO's heels, generating $1.2 billion on the quarter and $3.75 billion on the year, while adding subscribers at a much faster rate, adding 2.3 million actual paying customers on the fourth quarter. Remember when Time Warner boss Jeff Bewkes tried to brush aside Netflix, comparing it to the Albanian army
? Good times.
This will ultimately end with HBO offering that stand alone streaming broadband platform everybody wants but Time Warner refuses to provide (for fear of cannibalizing existing revenues generated by cable partnerships), but not without a few more years of denial first.