[REWIND] The Pros and Cons of ‘HBO Now’

Back in September, there was plentiful speculation about HBO’s rumored streaming-only service. Now that the service is here, how did the speculation stack up to the reality? Here’s a trip back to some of those early predictions.

Sept. 16, 2014, Chris Osterndorf writes: For TV junkies of the Internet age, the promised land may be on the horizon. That’s right, HBO may start offering streaming-only service

Speaking at an investment conference earlier this week, Time Warner CEO Jeff Bewkes said that the company is “seriously considering what is the best way to deal with online distribution.” For the many who have been pushing HBO to package HBO GO as a separate entity for awhile now, this is no small statement. And with Netflix marching ever forward to corner the streaming market, this could be a crucial moment for HBO.

Yet offering HBO GO without a subscription to HBO presents a number of difficult questions. While it’s undoubtedly a tantalizing possibility, there are as many challenges inherent in this scenario as there are benefits.

Pro: Easier for “Cord Cutters” and Millennials to Watch Their Favorite Shows

Offering HBO GO sans HBO already gels with the way a large number of millennials watch television. According to newfound data, this is a demographic that ingests three times more TV online than their older counterparts.

[Read the full text of Chris Osterndorf‘s Sept. 16th article here, at The Daily Dot]

These millennials are often lumped in as part of a larger group that’s been dubbed “cord cutters,” aka people who’ve dumped cable entirely to watch television through the Internet. And they’re a group that’s growing. A study that came out in June found that 2.9 percent of pay-TV consumers in this country are planning on canceling their cable service and joining the ranks of the cord cutters in the next year. This doesn’t sound like much until you take into account that this number is up from 2.7 percent last year, which was up from 2.2 percent the year before that, indicating American cord cutters are rising steadily.

Together, as millennials and cord cutters reject cable, they are changing the face of American television. HBO GO becoming its own service would be a huge victory for them, and for the shifting trends they represent.

Con: Harder for HBO to Create Content

However, offering HBO GO separately from HBO could come at a price. Because for now, HBO, and all the content they provide, are still very much entrenched in a classic model of distribution.

When viewers first started to clamor for standalone HBO GO accounts several years ago, Ryan Lawler at TechCrunch observed, “HBO currently has about 29 million subscribers and reportedly receives around $7 or $8 per subscriber per month. So HBO could, theoretically, get more per subscriber than it’s currently making. But that doesn’t include the cost of infrastructure needed to support delivery of all those streams, including all the CDN delivery and other costs that would come with rolling out a broader online-only service.”

He continues, “More importantly, it wouldn’t include the cost of sales, marketing, and support—and this is where HBO would really get screwed. Going direct to online customers by pitching HBO GO over-the-top would mean losing the support of its cable, satellite, and IPTV distributors. And since the Comcasts and the Time Warner Cables of the world are the top marketing channel for premium networks like HBO, it would be nearly impossible for HBO to make up for the loss of the cable provider’s marketing team or promotions.”

What does this ultimately mean for you, the consumer? In short, it means that if HBO suffers, their output also suffers.

So far, HBO is doing just fine in their fight against Netflix. Of course, they’re not able to provide the same wide array of movies and TV shows from other networks, but they’re as prestigious as ever, and they have several huge hits on their hands. In fact, Game of Thrones just surpassed The Sopranos to become their highest rated show ever. Read the rest of this entry »