HBO says no, for now, to fans who want a web-only option
mediadecoder.blogs.nytimes.com
mediadecoder.blogs.nytimes.com
"... and there’s no way that HBO could make up in online volume the number of subscribers it would lose from cable"
This assumes two things:
1. That all cable companies immediately will cut HBO from their lineups as soon as it offers web only deals. This is insane! What else will keep up the $100+ cable offerings? They have nothing else other than sports.
2. Where does this "no way" argument come from. HBO's cut from each cable subscriber is, I think ~$10. If it offers, say, a $40 all you can eat online option, how much of that revenue will go down to infrastructure, etc?
With Netflix and Amazon rising on one side and more and more of the younger demographic watching web-streamed shows, HBO will change, the questions is: will it take five years or two?
Edit: I think funnyordie videos are actually really well produced.
For example, Netflix are shooting for (comparatively) high-budget original content with several shows due to drop in 2013 (like Arrested Development) - there's also been a move towards joint production deals where the shows are produced for streaming on a service like Netflix in the US but then sold for TV broadcast in other countries.
Dr. Horrible cost over $200k. Game of Thrones costs upwards of $60 million per season.
I'm also willing to bet that there's no way you could get enough people to do that.
My guess is that HBO's contracts with cable providers have terms that are simply incompatible with a direct-to-consumer offering. If they were renegotiated at any point in the last five or so years, I would think it likely that such clauses exist. Perhaps not with every provider, but with enough to make things problematic prior to the next round of re-negotiations.
e.g. Suppose something in the contract indicates that Comcast only kicks back to HBO a fraction of the cheapest available consumer-facing price. (Protecting Comcast from HBO's turning around and cutting a sweetheart deal with another cable operator the next day)
In which case HBO's $10 cut of the $17ish that Comcast charges [1] would itself erode should HBO make a hypothetical $12/mo offering available.
So even if HBO's cable subscriber numbers held steady, they may well be facing a huge drop in revenue simply by making an economically-feasible direct-to-consumer offering. [2]
Or, it could be a more direct clause simply prevents any direct-to-consumer offering.
But that situation sounds the most likely to me. It would have been in the cable operators interests to ask for such clauses and in HBO's interests to concede. [3]
[1] Numbers based solely on prior articles I've read. I haven't had cable, let alone HBO, in quite some time.
[2] I think we can all agree that even HBO would be dead-in-the-water among cord-cutters at anything north of $15/mo. And anything between 10 and 15 gets debatable.
[3] Even three years ago streaming was not 'ready' to the point of justifying a fight with cable operators. Even now it's anything but a sure thing. Particularly when there hasn't been a real break-out leader in the IP-set-top-box space. They'd need to sign and support a half-dozen deals and platforms to give this thing an honest shot at the moment. Going slow with HBO Go is a very shrewd way to ease into the platform fight before a crush of public interest descends on a hypothetical consumer-direct offering.
If cable companies were to ever concede a direct-to-consumer offering from HBO, you can bet that HBO gets a smaller share of the cable subscriber revenue.
Without legislation protecting competition, the cable companies can easily stifle online competition with data caps and violations of net neutrality principles... this is likely because it is in their economic interest (albeit, in a subtle fashion) to do so. My guess is that HBO understands how much this would hurt their bottom-line just as well as SONY does[1].
Lesson: lack of broadband competition harms the consumer and stifles innovation.
[1] http://www.theverge.com/2012/5/2/2993265/sony-iptv-plans-com...
#1 Netflix, Amazon, Hulu, or (gasp) Google start outspending HBO on serial shows. The next show of the caliber of "Game of Thrones" or "Sopranos" is not offered through HBO.
#2 Consumers fail to see why they should be paying for HBO, or even want it. You could say a #1 3-4 times, combined with a failure to produce a notable show for a while, would kill HBO's desirability as a brand.
What HBO's management is doing is managing for death. This is what you do when you have a company with a passing business model to keep it as profitable as possible for as long as possible. In some ways you could imagine HBO as a porn company 8 years ago that primarily produced DVDs. Their business is still profitable and glamorous, they are mostly ignoring the pirates, but their real enemy is right around the corner.
HBO still has the possibility of transitioning. People care about HBO, thus all these stories about it. What they've done is tell their competitors "come get us." (alternatively HBO could just be calling their bluff and has full plans ready to switch to a web/mobile version)
My point isn't that this moots HBO's sensitivity to (say) Netflix doing the next Game of Thrones, but rather that it's unlikely HBO is going to move to preempt that. HBO does not appear to have reacted to Mad Men, Breaking Bad, Justified, or Sons of Anarchy as existential threats to their business.
If Netflix is the threat that is going to motivate HBO to go direct to consumer, they're going to have to put their money and their execution where their mouth is first. I have my doubts that they're equipped to pull that off, because I think they have an adverse selection problem: for prestige reasons, the best content is going to hit HBO, then Showtime, then AMC, and so on down the line.
Having said that, Netflix having 5 or 6 top-notch shows is no real threat to HBO, no more than AMC already having 3 or 4 top-notch shows is.
As long as HBO has their handful of shows people want to see, they don't care if a few other distribution channels also have shows people want to see. It doesn't hurt them, not even a little. A case could be made that it even helps a bit in terms of raising the prestige of the medium. There's a definite sense right now that the real gems of Hollywood are on television rather than in the cinema. It's a golden age, of sorts.
There are other factors as well, such as Mad Men sucking up AMC's money from other shows, that limit the threats the other networks can pose to them.
Aren't all their shows available on iTunes, Amazon, etc.? I would also expect them to be included in TV Everywhere when that manages to fully roll out.
Anecdotally, from what I've read, show runners love HBO.
Anybody who thinks HBO is at risk either isn't paying attention to it, or just has tastes outside the mainstream. They have among best original content -- scripted shows, comedy specials, 'reality' shows, documentaries, and movies -- on television today. And have. For the last 15 years.
The illusion that quality will reign supreme is just that. Since the 90s crap TV shows have got the ratings.
Or to put it another way, they're doing an excellent job of helping sell the idea of piracy to people who probably otherwise wouldn't bother. Once those people get used to it, it will be that much harder to sell them a pay service.
(Full disclosure, I download content, so my horse is not particularly high, and I'm not even on it right now.)
Not to mention one can wait for the shows to be on Blu-Ray.
No blu-ray releases where I live, I don't know anyone who owns blu-ray and don't have one.
So there is no reason to not torrent them.
You hear about these fantastic shows coming out of the States, try to find where you can watch them...wait for months if you are lucky, otherwise pirating is your only option if you want to see them. A highly seeded, HD torrent is usually available hours after the show aired in the states. That's what HBO is really competing with. Until they address this latent international demand, piracy will continue. Most internet users are outside the US[1].
In a way they should be grateful they're producing great shows that boost the HBO brand (for free), at least then they can monetise the pirates down the line if they're smart. A bigger problem would be if people simply started watching shows from rival networks.
[1] http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&#...
I honestly think that "unavailability" is the cause of 90% of pirating. Not because people don't want to buy stuff, they simply can't.
Why lead when you can follow and still stay rich?
I think that's a little unfair. HBO is clearly leading in terms of show quality.
It's all a matter of when. They'll need to see some good numbers before they start providing their own channel for their content on the internet.
Also, in addition to a few hundred from me per year, they would be getting a few hundred from hundreds of thousands of other people willing to pay for access without cable or in other countries with no HBO option.
As I said, I respect their right to make business decisions I disagree with. I will happily go on downloading and not giving them a dime, because I am never paying for cable again.
I have no qualms with obtaining their content through other means if they refuse to let me pay for it.
If they can't do their job by figuring it out, why do they feel entitled to anything?
Don't you think it is symmetric? HBO is doing what they want and making money. Torrenters are doing what they want and having entertainment.
So why blame people for stealing even if the owner doesn't? Who are you to blame anyone if the "victim" doesn't feel affected by "crime"? Who are you?
Not only that - they actively harm the whole market by doing so. People outside USA are forced to torrent their shows, and when they learned torrent they proceed to download other media, too, that they could have paid for.
You do not "take steps". "Taking steps" isn't the same as caring about something. The way they "take steps" is inherently peristaltic.
If you can't do your job by figuring it out, why do you feel entitled to keep strangers out of your home?
But you got the question wrong. There is no metaphor involving doors and locks about seller being unable to sell and thus losing money.
Netflix is going to try, and they succeed then I'm sure that HBO will think a bit harder about it, but right now there isn't much to be gained from them being the one to take the leap.
HBO is free to distribute via the internet if they so choose and the cable operators are free to stop distributing their content.
Essentially, HBO will eventually fall and start offering content available for streaming. It's just a question of when. This is where the market is headed and even cable companies are getting into the streaming game.
In the meantime, I'd settle for an HBO Go app that wasn't junk.
Basically, the only place I can use HBO Go and get a good experience is my own house.
Why it's called HBO Go is anyone's guess.
This is HBO's loss. They could be making money by partnering with the likes of Roku, Microsoft and Sony. Instead they are going to let dinasaurs like Comcast and TWC drag them down. I tried writing to HBO a while ago. They did not bother responding. I cannot help but feel quiet satisfaction knowing that they are losing so much money.
Except if they don't get ahead of the curve they'll find that most people have gone down the routes of waiting for it to get to NetFlix, pirating it, or not giving a damn at all. Bye bye millions.
Ok.
UNLEASH THE TORRENTS!
I'm not saying don't torrent HBO shows: go ahead - but reward companies who are trying to come up with creative ways to get content distributed online. Torrenting a HBO show rather than subscribing deprives HBO of revenue: giving your money to a competitor not only deprives HBO of revenue, but provide a competitor with the finances to take them on.