What the HBO Streaming Service Could Look Like

It’s not TV. It’s HBO Go-It-Alone.

That is what we’ll call the standalone streaming service HBO CEO Richard Plepler finally confirmed Wednesday would be available in the U.S. next year. Tellingly and somewhat unexpectedly, Plepler did not refer to the standalone service as HBO Go, the existing digital extension of the core HBO offering that everyone has been waiting to break off. While that doesn’t necessarily mean the new standalone product won’t be called HBO Go, it’s possible there will be an entirely new brand introduced.

Nevertheless, the fact remains that we know absolutely nothing about what HBO Go-It-Alone is actually going to be, and the possibilities are numerous. But let’s question three presumptions right off the bat:

1) that HBO Go-It-Alone will simply be the same offering as what current HBO subscribers get.
2) that whatever HBO Go-It-Alone is represents a direct competitive response to Netflix.
3) that HBO Go-It-Alone will represent some kind of snub to HBO’s pay-TV distribution partners.

Let’s take the last one first.

MSOs would seem to be disadvantaged by losing out on the revenues that would otherwise come from upselling the traditional HBO package on top of basic cable, as they’ve done for decades with incredible success for both parties.

Which is why it’s worth betting that Time Warner has figured out some kind of middle passage between reaching out to a segment of consumers who aren’t currently subscribing to HBO and not killing the golden goose that is its lucrative core business.

Counterintuitive as it might sound, the Comcasts and DirecTVs may actually have something to gain from HBO Go-It-Alone.

HBO Go-It-Alone may very well be positioned as something of a gateway drug to the full HBO experience that would remain exclusively available through pay-TV providers, perhaps even bundled with broadband subscriptions — an arrangement that has already received a fair amount of experimentation.

To make a move without the distributors OK sets up the kind of tangling over bandwidth capacity that has been a huge distraction for Netflix this year on the net neutrality front.

To avoid endangering its core subscription business, it’s conceivable HBO may only make HBO Go-It-Alone accessible to the 10 million U.S. broadband-only homes out there. If HBO Go-It-Alone only comes bundled with a pay-TV provider’s broadband offering, for instance, they could disqualify their basic-cable subs.

But if that’s not the case because that could risk inducing cord-cutting, that brings us back to a burning question: How would HBO Go-It-Alone not induce a mass exodus of regular HBO subscriptions?

The easiest way is to make the price point in excess of the $15 the typical HBO sub pays each month. But that would make the product far more expensive than Netflix. But if HBO Go-It-Alone were available for, say, $18 per month, that would send a not-so-subtle message to consumers that the pay-TV route is the more economical way to go.

Or HBO could go in the opposite direction and make HBO Go-It-Alone cheaper than HBO but with less features than you get with the traditional package to ensure the core product is protected. Perhaps HBO Go-It-Alone would be just original programming that HBO owns, and not movies from its output deals. Or the original programming would have limited windows that would prevent the catch-up viewing HBO Go provides with its own deep library.

For instance, picture HBO Go-It-Alone for $9, but restricted to only whatever original program is currently airing new episodes like “Boardwalk Empire” (pictured above) without access to previous seasons. That may not tempt too much churn from current HBO subs.

Note that HBO may have already tipped its hand that its deep library is not part of HBO Go-It-Alone given the deal done earlier this year with Amazon Prime that handed off rights to oodles of its earlier hits like “The Sopranos.”

It’s possible HBO could do something more intricate than just a one-price-fits-all model, a direction Netflix seems to be heading in, but there’s something to be said for simplicity.

Given the very real rivalry between HBO and Netflix, it seems unlikely to be coincidental that the day of the latter company’s third-quarter earnings announcement was chosen as the moment to unveil a new standalone service. Wall Street is spoiling for a head-to-head fight between these companies, which was reflected in the instant downturn Netflix’s stock took on the heels of the announcement.

And yet don’t be so sure that whatever HBO Go-It-Alone is will be an offering comparable to what Netflix is doing.

It’s interesting that on the very same day that HBO made this momentous announcement, Netflix made its own announcement regarding the licensing of the entire run of “Friends.” That’s noteworthy because the hit NBC series comes from Warner Bros., a sibling division of HBO inside Time Warner.

HBO could have conceivably created a “Netflix killer” of a product that not only encompassed its own massive library but tapped the even broader Warner Bros. library as well–an alternative that HBO execs have alluded to in the past. But the “Friends” deal would seem to indicate that this isn’t the route HBO has chosen to take.

Whatever HBO Go-It-Alone is, there has to be a way of slicing off a meaningful sliver of the existing offering in a way that doesn’t trigger cannibalization.

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