You will be redirected back to your article in seconds

Time to Free HBO Go From Its TV Shackles

Enough stonewalling, HBO. Let consumers pay for broadband-only subscriptions before it’s too late

A new season of “Game of Thrones,” a new round of groans. Because the HBO series had the distinction of being the most pirated show on TV last year, expect much blogosphere bellyaching on the sore subject of the premium channel’s digital platform, HBO Go.

If only it could be purchased without also having to pony up for a subscription, “Thrones” fans whine, so many wouldn’t have to resort to piracy.

But HBO has good reason not to untether HBO Go. Such a move would undoubtedly trigger a mass exodus from the subscriber base that provides the lion’s share of the $1.5 billion in profits the Time Warner unit pocketed last year. Such a split would also upset the pay TV distributors who fork over billions to lock up that programming exclusively, not to mention shoulder some or all of the marketing and subscriber acquisition costs.

And yet the whiners are correct: It’s time for a broadband-only offering from HBO in the U.S. Let’s call it HBO Go-It-Alone.

Reducing copyright infringement isn’t even the primary reason to make HBO Go available on a standalone basis. More to the point is that the demand for a broadband-only version of HBO is going to grow astronomically; the subscriber count for the linear channels will not.

(From the pages of the March 26 issue of Variety.)

Think back to last year’s “Take My Money, HBO” campaign, which induced thousands to declare via Twitter — unprompted by HBO — how much they would pay for a standalone broadband offering ($12 on average). If that’s what the prospect of such a product could elicit just midway through HBO Go’s three-year history, just imagine how that demand has risen as the app becomes ubiquitous across devices.

There’s got to be an untapped market segment among the 80 million broadband subs across the U.S. who aren’t going to pay for HBO as a $15 charge on top of a $70 basic cable tier, but will pay for HBO Go on top of a broadband subscription. HBO may already be learning about such consumer appetites in the Nordic countries, the only region where HBO Go is on its own, albeit in a very different market than the U.S.

The latter scenario invites a very real cannibalization threat to the former, but it’s not as if HBO Go-It-Alone would knock linear HBO off rocket-like growth trajectory. The channel’s sub count leveled off below 30 million years ago; the company has managed to maintain profitability by diversifying via everything from DVD sales to international expansion.

But that subscription plateau is precisely why HBO Go-It-Alone needs to happen. There is a way to manage the inevitable decline of linear HBO in such a way that it happens more slowly than the simultaneous growth of HBO Go-It-Alone. A broadband version can still command a decent price point without offering everything the existing HBO Go does, like curtailing access to previous seasons, restricting viewing to handheld devices, even delaying the premiere window for original series.

Time Warner might be surprised what limitations would be tolerated by consumers who are interested in HBO but will never cross the $85 barrier, and the differentiation from linear could diminish cannibalization.

This may all seem immaterial if pay TV distributors would disapprove. But don’t forget that some of the same distribution partners HBO can’t afford to piss off also have a vested interest in adding value to the broadband services that are becoming more important to their businesses. Helping cover the infrastructure costs of HBO Go-It-Alone may help make the economics work in a way they wouldn’t have worked if HBO was stuck with the bill.

The Comcasts of the world have to ask themselves whether HBO is of more value to them in the long term as a non-essential feather in the cap of its video business or as a gamechanging value-add to its triple-play offering.

Netflix is broadband’s biggest attraction, and that should worry Time Warner. But HBO Go-It-Alone would have the goods to compete against Netflix for subscription dollars on the strength of its vast original programming catalog.

That advantage, however, is going to last for only so long, given how aggressively Netflix is ramping up original efforts beyond House of Cards. As Netflix chief content officer Ted Sarandos recently summed up the competitive landscape, “The goal is to become HBO faster than HBO can become us.”

Whenever HBO execs are asked about the future of HBO Go, they qualify their strategy as their stance “today.” But they’d better move faster or the opportunity won’t look as good tomorrow.

More Biz

  • Jussie Smollett

    Jussie Smollett Charged With Filing False Police Report

    “Empire” actor Jussie Smollett has been charged with filing a false police report, the Chicago police said Wednesday. “Detectives will make contact with his legal team to negotiate a reasonable surrender for his arrest,” police spokesman Anthony Guglielmi said on Twitter. Smollett is due to appear in court for a bond hearing at 1:30 p.m. [...]

  • Coast Guard Lieutenant Hit List

    Coast Guard Lieutenant Targeted CNN, MSNBC Anchors and Democrats for Attacks

    Anchors at CNN and MSNBC and prominent Democrats were targeted for attack by a Coast Guard lieutenant arrested Friday on a firearms charge, according to federal prosecutors in Maryland. In court documents revealed Tuesday, prosecutors describe the firearms and controlled substance charges Christopher Paul Hasson is facing as “the proverbial tip of the iceberg.” CNN’s [...]

  • Jussie Smollett suspect

    Jussie Smollett Named a Suspect by Chicago Police for Filing False Report

    Chicago police have named “Empire” actor Jussie Smollett as a suspect in a criminal investigation, three weeks after he reported he was the victim of a hate crime. Detectives are presenting evidence to a grand jury, which is expected to determine whether to indict Smollett on a charge of filing a false police report. “Jussie [...]

  • Contract Placeholder Business

    WGA, Agents Face Tough Issues on New Franchise Pact (Column)

    The Writers Guild of America and the major talent agencies are seven weeks away from a deadline that could force film and TV writers to choose between their agents and their union. This is a battle that has been brewing for a year but few in the industry saw coming until a few weeks ago. [...]

  • Island Records Names Christine Kauffman Senior

    Island Records Names Christine Kauffman Senior VP of Brand Partnerships

    Veteran advertising executive Christine Kauffman has been named senior VP of brand partnerships at Island Records, the company announced today. She will be based in New York and report to Island COO Eric Wong. In making the announcement, Island President Darcus Beese said, “The fast-paced and competitive field of strategic brand marketing has become an [...]

  • Latin Music Veteran Nir Serioussi Joins

    Latin Music Veteran Nir Serioussi Joins Interscope as Executive VP

    Interscope Geffen A&M announced today that veteran executive, producer and songwriter Nir Seroussi will join the company as executive vice president. The announcement was made by Interscope Geffen A&M Chairman and CEO John Janick, to whom Serioussi will report. (Seroussi, center, is pictured above with Janick, left, and Interscope EVP Joie Manda.) According to the [...]

  • Tan FranceUnforgettable Gala, Inside, Los Angeles,

    'Queer Eye' Star Tan France to Host Audiobook Audie Awards

    “Queer Eye” resident style expert Tan France is taking on a slightly different project next month as he hosts the Audie Awards, which honors the best releases and achievements in audiobooks over the past 12 months. The ceremony, which takes place on March 4 in New York, is an annual event organized by the Audio [...]

More From Our Brands

Access exclusive content