HBO to Netflix: We’re taking our ball & going home
venturebeat.com
venturebeat.com
Perfect picture of an out of touch media executive.
For the first time in my life, I can say with almost complete assurance, that the reason the majority of the people I know are torrenting, is because the rights owner isn't willing to sell in format that they want to watch it in.
Don't call him out of Touch though - The reality, though, is that the CEO of HBO is a highly informed profit maximizing individual and the reason we don't get Game of Thrones on DVD/iTunes, is because of the huge revenue stream represented by the other 95% (99%?) of the population who is more than happy to Tivo GameOfThrones. He'll forego the 5% of us who won't purchase it on Cable, in order to make money on the other 95% The Reality is, that some percentage of that 5% would have Torrented it rather than paying the $50 for an iTunes season.
They know how much they can make through iTunes, DVD Sales, and, most importantly, their Cable Customers (Comcast, etc...).
And, if SOPA goes through, it will provide a platform for attacking the Torrents. First the entertainment industry will DNS blackhole "piratebay.org", then, when people avoiding that in numbers enough to matter, they will pass SOPA Part II, and start blackholing IP addresses. SOPA Part III will come out once people figure some way of connecting to dynamically assigned IP addresses.
It will be a legislative game of Cat-and-Mouse driven by the massive $$$ that the entertainment industry is paying the lobbyists.
The only reason I'd resume cable service, incidentally, would be for Game of Thrones season 2. Since I travel so much its likely I would just wait for other options. I don't download torrents.
HBO is a golden goose. Its an exception. They produce exceptionally high quality shows. The things that will work for HBO won't work for the other guys. HBO may be able to sell subscriptions directly to users. Their HBO Go app is exceptional, better than Netflix's to a degree.
When I travel and sit in a hotel room I wonder why any of us ever paid for this garbage. The amount of advertising sandwiched in to amateur level programming is akin to a 1998 porn site full of pop ups. Its not pretty.
Golden geese can become arrogant. If I owned a cable company, any exec who blamed the economy on a drop in subscriptions would be immediately fired.
Home Box Office, Inc is owned by Time Warner. Because of that, I have a feeling the golden goose will ultimately end up going down with the ship it is caged in.
The market for the DVDs is still good (True Blood S3 was the #1 TV show DVD for 2011) and I'm sure they're research tells them they get more from conversions then they lose in DVD sales by opening it up 2 months earlier. And if they started selling DVDs 6 months earlier they'd lose current subscribers like you say.
I did, and I just finished watching all 10 season one episodes of Game of Thrones in HD.
And you know what? It was worth it. I love that show. :)
The fact that Game of Thrones is available on BitTorrent though... that is itself a problem. HBO is within its rights to prevent its content from being published for free to anonymous Internet users.
SOPA will be incredibly destructive to a _vast_ range of internet properties, and it's not clear how effective it will be long term in protecting the entertainment industry.
Re: Game of Thrones on BItTorrent - Everything is available on Bit Torrent. People with money are typically honest, and turn to Torrenting only because they have no other avenues to purchase these things honestly.
[edit]: I used to think that Torrenting was unethical/immoral in addition to being illegal. Now that I pay for pretty much 100% of everything I watch - I think Torrenting plays an important role in motivating rights holders to make their material both competitive and broadly available. $50/Season for GameOfThrones is fine, as long as it's available (a) in a format I can download onto my MacBook Air, and (b) on a timely basis. HBO would have close to zero motivation to make this content available in downloadable format on a timely basis if there weren't alternatives.
Remember - Consumers are _customers_ - all we really want is to be able to read/play/listen/purchase the content that is created in a format compatible with the tools/systems that we use.
Fragmenting the content like this over numerous streaming solutions each with their own charges and workings is, in my eyes, a huge step backwards for online content. I can't see users being happy to pay more parties for the same content on numerous services. This to me reeks of networks killing the golden goose.
having one large company on the internet be the "distribution" company for a bunch of media creators sounds a lot like cable TV doesn't it? I think we actually DO want the media fragmented across multiple providers. We should look at it as a Good Thing that media creators distribute their own media, no matter how big they are.
If Netflix hemorrhages subscribers and loses it's value proposition vs cable that's clearly good for HBO/Time Warner/Turner.
Giving your competition a discount is what doesn't make sense and that's why HBO decided to stop doing it.
Is it? How much money will they make from all the torrents?
I could do without the decade old movies.
I think the same is true for Akaimai and other CDN's that host servers with ISP's to provide local caches to content. This would certainly also mean that bandwidth caps become more generous because so much of the content that most people are using is on CDN's.
On the other hand, try pattern matching this against the "band decides to put work directly on internet rather than going through a label" or "writer decides to self-publish rather than go through a publisher" story. Why wouldn't a direct-sales model work for them?
Admittedly, they aren't quite doing the direct-sales model, since they only grant access to HBO GO through some sort of premium TV subscription. But if they offered direct subscriptions to HBO GO...
Unfortunately, that's exactly what they won't do- they've stated as much themselves. The cable companies essentially promote HBO for free right now, so HBO is unwilling to rock the boat with them. Selling subscriptions online would most definitely rock the boat.
I don't know if I blame them or not. I don't think there is any doubt that this kind of online subscription is the future, but I'm not sure it would reach as many people as a premium cable subscription would right now, so they'd stand to lose a lot of money and subscribers. Of course, setting up HBO GO means that they have the system set up and ready to go whenever the market changes.
That said, I don't think there is a major cable provider out there right now who'd dare drop HBO from all of its offerings if push came to shove. And I think HBO is, in many ways, the perfect content brand for on-demand subscriptions or a la carte episode sales on digital ecosystems. Its content is top-notch, and the potential audience for that content is theoretically a large multiple of the current HBO subscriber base. The quality of a typical HBO scripted series is lightyears beyond that of almost any other network show, and consumers would eat it up.
I agree with you that HBO seems well-positioned for either world right now: the world in which it currently lives, or the world in which it could find itself a few years from now. HBO GO is a great app with what I imagine is a large install base. It seems relatively future-ready, if not wholly future-proof.
To steal a page from John Gruber, this sounds like one to keep for claim chowder.
But right up until that point, they will say cable is great and will never go down.
Thinking this is "claim chowder" is just thinking too small and literally.
I suspect the scenario you describe is correct, they'll defend cable up until they launch their own service.
Do the executives really just keep the blinders on all the time?
1) Check out Netflix Instant.
2) Hit up Amazon VOD.
3) Check out iTunes
IFF those fail, then I go to the bay.
I prefer to use legitimate services to get content. But I'm not moving away from my keyboard to do it, and I'm not paying for HBO/Showtime/etc just for the one or two shows I want to watch.
And this is on a free trial of the Hulu Plus paid subscription service.
I just can't see paying a subscription fee for that user experience. In contrast, with Netflix, every time the program hits one of the advertisement breaks, you get the little psychological reward: "Hurray! No ads!"
You describe yourself as a software entrepeneur - I'm assuming you want to get paid for that in some way shape or form - how would you feel if people stole / infringed what you developed and denied you revenue?
I just do not get the prevailing attitude amongst a lot of people here on HN.
Say I'm the lead engineer for Angry Birds.
But instead of releasing it for iOS, Android, and Chrome, Roxio built a shitty little handheld device that cost more than an iPhone but only played the handful of games they'd created.
Apple, Google, and even HP approached them about building versions of the game for their platform, but Roxio told them to eff off. They weren't going to give up a percentage of the potential revenue.
Then the community, in love with the game, cracked the sorry little handheld and ported the game to iOS/Android/webOS. Sales of the sorry little device plummet.
So how would I "feel"? I'd feel like lynching the PHBs that refused to concede a minority percentage of a massive revenue stream in favor of a 100% share of a tiny/no-existent one. I'd think they were arrogant fools for trying to maintain a white-knuckled grasp on distribution when that clearly belonged to Apple and Google, and I would curse their greed.
And hell, it might even work. Isn't this what we've been asking for? A la carte cable channel selection?
It's not great though.
I was not aware of this. Anything I've said about HBO Go that sounded positive may be redacted and ignored.
edit: typo
I've found HBO Go quality to be a bit too poor, even on a great connection.
Neither are nearly as good as Netflix, which I can force the bitrate using CTRL-ALT-SHIFT-S, let it buffer for a little while, then watch it straight through without issue. (Granted the secret hotkey is a little unfair, and HBO Go may very well have one too. That's the least important part, though)
I learned both of these from Day[9], of all people.
In December, Netflix CEO Reed Hastings told an investors conference that HBO's online viewing service, HBO GO, was "the competitor we fear the most."
I'm sure Amazon, Apple, Google and others are ready and willing to pay HBO for an option that bypasses the cable requirement, and at some point it may be lucrative enough for HBO.
On the other hand, Comcast probably has HBO over a barrel, given they also own the last-mile for millions of internet users as well.
While this is true, I have to think HBO has already built a payment system and is literally a flip the switch away from charging customers directly for streaming. Netflixs CEO is future looking if nothing else, and I'm sure he's come to the same conclusion.
This is idiotic on HBO's part.
Look, it's pretty simple: I want to watch "True Blood", which is currently in Season 5. Netflix doesn't even have S4 yet. I'm willing to pay good money, say $20 for a season, but am not so crazy as to pay $$ for crappy supreme-whatever package from Comcast. The reason is not that I hate Comcast (I do) but I'm not interested in other channels (sports etc.) in the package, i.e. I want HBO only.
I just went to Amazon, though, to check the price of a Bored to Death DVD to add to my point (a show I enjoy, but I don't really want to own on DVD and would pay to stream) and it came up as available for streaming through Amazon Instant Video. Odd since that seems like a non-hbo subscriber being able to watch on a digital platform. I assume having Amazon Prime grants access to the show, too.
HBO can get paid for it or not, it's their choice. Looks like they're making the stupid choice.
I'm sure many (most?) will disagree, but I see these services as on their way out. Quickly. They could have lived longer had they brought out more flexible subscription plans. For example, no way would I have a monthly subscription, but there have been many times I would have paid some fee for a shorter block just to catch a movie or event.
TV has a certain "lemming" following: people want particular content because other people want that content. When enough people expect the bulk of their content via Netflix (or wherever) the social pressure to stick to "cable" will evaporate.
Now if somebody could just replicate the "here we are now, entertain us" brain-dead delivery system that cable/OTA provides.
> Once the public begins to transition en masse to
> another medium, it's very fast.
I'd say HBO is one of the most relevant forces in TV these days.
Seeing as how their original content is widely torrented, yes.
The problem with making money off streaming is it's easy to overcome all the technical problems of streaming these days - all they are doing is using Amazon's CDN.
So the content owners can just DIY when they want to squeeze every penny of profit out of it.
What I really want is a streaming service that lets me choose what sources I subscribe to in an a la cart manner. If Netflix wants to survive losing these content providers I think that's the direction they should go in: become a platform. And if they don't, it's a great idea for a startup.
I would be surprised if Time Warner put HBO up for sale any time soon if ever.