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Netflix CEO: HBO Will Launch Direct Streaming Service
Company Says HBO's Direct-to-user Play Inevitable
by Karl Bode 08:58AM Wednesday Oct 24 2012
Netflix CEO says his company is operating under the assumption that HBO will eventually launch a streaming service that does not require a traditional cable subscription, despite HBO's repeated claims that such a service doesn't make sense. "We think it will make strategic sense eventually for HBO to go direct-to-consumer in the U.S., and become more of a competitor to Netflix; so, that is our operating assumption," CEO Reed Hastings said on a company earnings call this week. HBO has repeatedly insisted that the numbers just don't work for a direct-to-user service, and has played it safe -- only offering streaming services to cable TV subscribers -- out of fear that they'll lose cable subsidies. Granted while Netflix remains fixated on HBO, the Verizon and RedBox joint venture could sneak up from behind.

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pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Not News

Did HBO officially say they were doing this? Unless they did all this is is gossip and wishful thinking.
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Romney/Ryan 2012 - Put a couple of mature adults in charge.

AnonFTW

@reliablehosting.com

Re: Not News

said by pnh102:

Did HBO officially say they were doing this? Unless they did all this is is gossip and wishful thinking.

Right, because what could the CEO of Netflix possibly know about his industry?

HBO already offers a streaming service, all they have to do is drop the requirement of a cable/satellite subscription and move to their own authentication system.

What will likely force their hand? Game of Thrones. Game of Thrones Season 1 (alone) cost $50 million to produce, Season 2 cost about $60 million, Season 3 is approaching $100 million, all while cable subscriptions are going down. Yet, all seasons of the show set records for the most pirated TV show, ever. HBO, even at the risk of angering their cable and satellite bedfellows, can't ignore the potential revenue stream staring them in the face. If Netflix can charge $9 a month for unlimited streaming, loads of people would pay that for several months of HBO and who knows, might even get hooked on first run movies and HBO's other shows.

The bigger picture here is that we're all going to get what we want, a sort of a la carte choice - albeit in streaming format - and HBO realizes it's inevitable. However, as a cord cutter, I can easily see the average household spending more money buying individual subscription services, purchasing season passes to shows, and renting individual movies piecemeal as the services become available.

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

Re: Not News

said by AnonFTW :

Right, because what could the CEO of Netflix possibly know about his industry?

Quixster.

said by AnonFTW :

What will likely force their hand? Game of Thrones. Game of Thrones Season 1 (alone) cost $50 million to produce, Season 2 cost about $60 million, Season 3 is approaching $100 million, all while cable subscriptions are going down. Yet, all seasons of the show set records for the most pirated TV show, ever. HBO, even at the risk of angering their cable and satellite bedfellows, can't ignore the potential revenue stream staring them in the face. If Netflix can charge $9 a month for unlimited streaming, loads of people would pay that for several months of HBO and who knows, might even get hooked on first run movies and HBO's other shows.

You are correct in your numbers but your conclusion is improbably optimistic. $9 a month for streaming gets you a lot of sub-par or dated entertainment. Now for someone like me who places very little value on content, I don't mind. But for normal people, this isn't the best of options.

I also am a cord-cutter. But the fact remains that compared to the number of people who pay for TV (about 100 million subscribers total), our numbers are small (about 125k the last I read here). Compared to the numbers of subscribers HBO gets through cable/satellite/telco TV providers, we don't even resonate in the margin of error. For HBO to develop and provide a standalone solution for people like us won't make much sense for them financially, especially if they antagonize their content delivery partners.

Also consider who we are... we, as cord-cutters, are people who specifically do NOT want to pay a lot of money for entertainment. HBO is a premium product. For there to be any appeal, they would have to offer what amounts to a value package that isn't too expensive ($15 a month tops). I don't see them doing that.
said by AnonFTW :

The bigger picture here is that we're all going to get what we want, a sort of a la carte choice - albeit in streaming format - and HBO realizes it's inevitable.

I don't agree. Maybe when 125k becomes 1 million, or 5 million, I might change my mind.
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Romney/Ryan 2012 - Put a couple of mature adults in charge.

ITALIAN926

join:2003-08-16
kudos:2
Reviews:
·Verizon FiOS
People are funny. Insinuating things like "Pirating will decrease if HBO offers a streaming option". THIEVES will continue to STEAL Game of Thrones whether theres an HBO $15 streaming option or not.

There are reasons for HBO to possibly switch to a streaming option, THIEVES have nothing to do with it.
Skippy25

join:2000-09-13
Hazelwood, MO

Re: Not News

Not true. I personally am not into that show, but if I was I would not pay any provider $20 a month for HBO just to get one show.

However, I would pay about $20 for a full season of a show I enjoy.

pnh102
Reptiles Are Cuddly And Pretty
Premium
join:2002-05-02
Mount Airy, MD

1 recommendation

Re: Not News

said by Skippy25:

Not true. I personally am not into that show, but if I was I would not pay any provider $20 a month for HBO just to get one show.

However, I would pay about $20 for a full season of a show I enjoy.

Sure it is true. If you currently pay $0 for content by pirating it, why would you pay anything more to watch it instead?
--
Romney/Ryan 2012 - Put a couple of mature adults in charge.
bn1221

join:2009-04-29
Cortland, NY

Re: Not News

Convenience. I'd pay a buck an episode for commercial free NCIS and Downtown Abbey.

Corehhi

join:2002-01-28
Bluffton, SC
Reviews:
·Hargray Cable

Re: Not News

said by bn1221:

Convenience. I'd pay a buck an episode for commercial free NCIS and Downtown Abbey.

That's too much.
bn1221

join:2009-04-29
Cortland, NY

Re: Not News

It is what I feel it is worth. Itunes sells a season for 20$ IIRC. NCIS has 22 episodes per season

aaronwt
Premium
join:2004-11-07
Woodbridge, VA
said by bn1221:

Convenience. I'd pay a buck an episode for commercial free NCIS and Downtown Abbey.

It's usually 3x that for HD and 2x that for SD on VOD services.
Skippy25

join:2000-09-13
Hazelwood, MO

Re: Not News

They charge you at least a $1 more for HD, which is another silly thing. I am yet to hear an argument why that is, but if I did it probably would have nothing to do with technically needing to and everything to do with premium/quality of content.
bn1221

join:2009-04-29
Cortland, NY
And therein is the rub. I can watch free with laggy commericials at CBS.com. Or I can get them from Itunes for a season. Or I can torrent them. A buck per hour is what it is worth to me.

Corehhi

join:2002-01-28
Bluffton, SC
Reviews:
·Hargray Cable
said by pnh102:

said by Skippy25:

Not true. I personally am not into that show, but if I was I would not pay any provider $20 a month for HBO just to get one show.

However, I would pay about $20 for a full season of a show I enjoy.

Sure it is true. If you currently pay $0 for content by pirating it, why would you pay anything more to watch it instead?

Reason Itunes is successful, reasonable price to keep things legal. Price to high and who cares there are other ways to find media on line.
Skippy25

join:2000-09-13
Hazelwood, MO
Your assumption is that all people pirate because they dont want to pay. Which is completely false.

Many people pirate because of the restrictions in either getting the material through silly release windows, how the get it (streamed/digital/etc) or because it is not priced at an amount they are willing to pay.

Will some asshats refuse to pay anything at all and steal everything? Sure, but proclaiming ALL pirates would not pay a thing is silly as well.

I personally know about 15-20 people that PAY for pirated material and they do this because 1) they get the latest shows/movies/music 2) They get it in the format they want and 3) they pay a price they think is fair and are willing to pay. All of those people would purchase straight from the source if they met their conditions but they dont so they get $0 from them.

DISCLAIMER: I personally do not participate in that nor allow it in my home, but it certainly proves your statement wrong.

Corehhi

join:2002-01-28
Bluffton, SC
Reviews:
·Hargray Cable
I would buy HBO streaming for a cheap price no doubt. I'm a cord cutter and I would love to add HBO to my streaming options. In fact that is really all I want to do, I would pay $30-40 a month for cable if I could simply pick and choose what channels I wanted.

spewak
R.I.P Dadkins
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Elk Grove, CA
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said by pnh102:

Did HBO officially say they were doing this? Unless they did all this is is gossip and wishful thinking.

The Reedster was spitballing. He has no clue at all.
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ITALIAN926

join:2003-08-16
kudos:2

lol

You know what happens when you assume?
nfotiu

join:2009-01-25

Why a competitor?

A little narrow minded to see hbo as a competitor. Standalone hbo go would encourage more cord cutting, which would probably help netflix. If Netflix was smart, they'd court hbo and resell hbo as a 15 dollar add on to Netflix. Netflix has a great infrastructure to offer hbo with apps on every smart tv, blu ray player, phone, tablet, game console,etc.

Netflix desperately needs to offer some more content, even if they have to offer it as a premium priced option. If not, where are the growth opportunities? They are probably getting close to saturating the market with their current model.
mogamer

join:2011-04-20
Royal Oak, MI

Re: Why a competitor?

said by nfotiu:

A little narrow minded to see hbo as a competitor. Standalone hbo go would encourage more cord cutting, which would probably help netflix. If Netflix was smart, they'd court hbo and resell hbo as a 15 dollar add on to Netflix. Netflix has a great infrastructure to offer hbo with apps on every smart tv, blu ray player, phone, tablet, game console,etc.

Netflix desperately needs to offer some more content, even if they have to offer it as a premium priced option. If not, where are the growth opportunities? They are probably getting close to saturating the market with their current model.

Netflix and Starz broke their relationship due to Starz wanting to be on a premium tier. Netflix (and I agree) felt that a special tier for Starz wasn't worth breaking their model. But HBO is a different story and it would really boost Netflix. The cord-cutters who haven't signed on to Netflix would really sign on. Maybe even get the MAXGO content with this.

HBO stand-alone would be the game changer in regard to cord-cutting. To be honest though I don't see it happening. And if HBO did offer a streaming only service, they won't be letting Netflix in on it.

Snakeoil
Ignore Button. The coward's feature.
Premium
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Mentor, OH
kudos:1
I agree. Though they are getting ready to launch a Kevin Spacey show shortly. I liked Lillyhammer and hope there is another season of it.
There is also another "original" show soon to air on netflix, arrested development. Not sure when it will be released.

I would be willing to pay a higher price for netflix, if it meant access to more current content.

Though the one thing people seem to be over looking:
Internet Service Providers. Those guys are trying to, or have, placed Bandwidth usage caps in place. The game industry isn't happy about that, nor is Netflix. Now you have redbox getting into streaming, Amazon Prime, Hulu, HBO. There is going to be a war between the customer, the Service Providers, and Content providers.
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Kearnstd
Elf Wizard
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join:2002-01-22
Mullica Hill, NJ
kudos:1

Re: Why a competitor?

The ISPs will likely win and our Cap&Overage situation are most likely only going to get worse. Mainly because the ISPs fear becoming what they should be, a big dumb pipe.
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JPL
Premium
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Downingtown, PA
kudos:4
said by nfotiu:

A little narrow minded to see hbo as a competitor. Standalone hbo go would encourage more cord cutting, which would probably help netflix. If Netflix was smart, they'd court hbo and resell hbo as a 15 dollar add on to Netflix. Netflix has a great infrastructure to offer hbo with apps on every smart tv, blu ray player, phone, tablet, game console,etc.

Netflix desperately needs to offer some more content, even if they have to offer it as a premium priced option. If not, where are the growth opportunities? They are probably getting close to saturating the market with their current model.

HBO has already stated why they wouldn't sell to Netflix. They (HBO) believe they're a premium source of entertainment, and they think that Netflix charges too little for their streaming service. They said outright that they wouldn't even consider such a move (having Netflix stream their content) unless Netflix first raised their prices to be more in line with a 'premium' service.

cableties
Premium
join:2005-01-27

Media is dead. Long live streaming.

DVDs... dead.
Bluray... dead.
Next 4K medium...streaming!

"He who controls the content..."
--
Splat

ITALIAN926

join:2003-08-16
kudos:2

1 edit

Re: Media is dead. Long live streaming.

Ummm streaming 4k over WHAT, is anyone even streaming 1080p? Is Netflix even 720p?
amungus
Premium
join:2004-11-26
America
Reviews:
·Cox HSI
·KCH Cable

Re: Media is dead. Long live streaming.

Yeah, um, lots of people. Not sure what rock you've been hiding under, but it's been around for quite some time.

Granted, it's not quite as "perfect" as it could be, and uses less bandwidth (edit: less bandwidth than MPEG-2 HD from cable, or MPEG-4 from Sat.), but it's pretty amazing that it looks as good as it does.

edit 2: Yes, Netflix has been streaming 1080p for some time now. It looks pretty good on my PS3 to TV.

»www.engadget.com/2010/10/14/netf···-1-surr/

ITALIAN926

join:2003-08-16
kudos:2
Reviews:
·Verizon FiOS

2 edits

Re: Media is dead. Long live streaming.

My point was internet speed in this country is not fast enough for 4K to be successful with streaming. I remember trying to download an HD movie on my old DSL connection , it took like 4 hours.

Maybe by the time 4K (or better ) is released, internet speeds will be adequate and widespread, but since so many people have current HDTV's, I dont think a higher resolution HD even has a chance, in the near future.

Whats the average connection in this country, 5Mbps? And that is blown up by people who have ultra-fast.

alchav

join:2002-05-17
Saint George, UT
said by ITALIAN926:

Ummm streaming 4k over WHAT, is anyone even streaming 1080p? Is Netflix even 720p?

You hit the nail on the head, Streaming over what? Some people say they like Streaming because they are Cord Cutters, so I guess to them Streaming is Wireless. So Streaming HD 720p Wireless is not going to happen, and don't even talk about Copper DSL. That only leaves Verizon FiOS or Google Fiber for good quality HD Streaming.

skuv

@rr.com
DVD is far from dead.
Bluray is far from dead.
4k streaming? Dream on.

One hour of 4k video is a little over 1TB. To stream a 4k movie real time would take 2.2gbit/sec.

And if you cut down on the bitrate to save bandwidth, you might as well not even watch a 4k video, since the quality would be way down.

It's bad enough that much of the 1920x1080 streaming video right now is no where near the 25-30mbit/sec of Bluray. Quality is ok, but compared to a Bluray, there really is no comparison.

No one is going to switch to a medium that barely any of their customers can use. If 4k makes it, it will be physical media to begin with.
jjeffeory

join:2002-12-04
USA
Only if you're under your CAP!

People who buy into this are just leading the sheep to the wolves!
silbaco
Premium
join:2009-08-03
USA

Likely

HBO has already started doing this in other countries. Doing it here is probably going to happen sooner or later.
elray

join:2000-12-16
Santa Monica, CA

Not Gonna Happen

HBO is not Redbox.

They're not going to abandon their existing distribution network partners to chase a few marginal dollars, while assuming all the burdens of delivery, network and tech support, billing and customer service.
osravens

join:2011-01-26
Cumberland, MD

Remember....

HBO has to give the cable companies a cut of their subscription fees. Get rid of the third wheel, and you keep that money in-house. Support and such would be minimal in terms of costs.

Also consider that Comcast keeps dropping HD feeds of HBO and other premium networks, claiming that they're a waste of money. I think it's safe to say the relationship may not be that strong anymore. Comcast certainly doesn't seem committed to their premium networks.

PaulHikeS2

join:2003-03-06
Manchester, NH

What is HBO's cut?

I'd love to know what HBO gets from the service providers for each subscriber. That would give an indication of what a potential HBO streaming service would cost. Does anyone have this info?
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Jay: What the @#$% is the internet???