HBO stepped up as competition for the video streaming entertainment provider Netflix when it announced its new Stand-Alone Online streaming Service to be launched in 2015. The service will provide HBO programming without the requirement of a cable subscription. This move comes as welcome news for cord cutters nationwide.
Cord Cutters are consumers who have become tired of price increases, outrageous fees and taxes from cable companies which require a subscription to 40 channels they do not watch simply so they can watch three or four. These consumers have ceased their cable subscriptions in favor of alternative online sources such as Netflix and Hulu.
In 2013, the 13 largest cable providers in the U.S. actually finished the year at a loss due to 1.7 million customers cutting the cord on the cable companies. Top providers for telephone and satellite service seemed to absorb 1.6 million of these subscribers. When the numbers are properly broken down, the loss of subscribers numbers 105,000 which does not seem like much at all. However, some are saying that this is a sign of a growing trend.
Up until now, content owners have been reluctant to step on the toes of their business relationships with cable providers. HBO maintains that with its target being consumers with internet only, roughly 10 million, it will not impact its relationship with the cable companies.
Considering the customers who may subscribe to HBO’s Stand-Alone Online-Streaming Service will still rely on internet to access the service so revenue will still be thrown the way of the cable companies who provide internet service. Still, if the service encourages consumers to drop TV service, revenue for cable companies will surely take a hit.
The Time Warner owned company’s move may be a warning sign for smaller networks that the game is about to change. If more cable subscribers become Cord Cutters, other networks may feel forced to follow in HBO’s footsteps with Stand-Alone Online-Streaming Services of their own. Ten million households in the U.S. do not subscribe to any television services at all. Half of those households subscribe to one streaming service or another, acquiring their entertainment online. There are currently 80 million homes without HBO and the company is going after those potential profits. With cord cutting being a growing trend, it seems that an untapped gold mine is about to open for business. The stand-alone streaming will grant access to HBO for those Cord Cutters who prefer to look to the internet to fulfill their entertainment needs.
Netflix boasted total revenue for the third quarter of $1.4 billion which is a significant increase of 27 percent from last year’s third quarter. With HBO planning to enter the game, companies such as Netflix, Hulu and Amazon can expect some healthy competition.
Hopefully HBO’s Stand-Alone Online-streaming Service that has been announced to be coming out in 2015 is ready for the number of customers predicted to subscribe. There is some question as to whether or not HBO’s current streaming service, HBO GO is capable of handling millions of subscribers considering the technical issues they have had with it. There are many other things to take into consideration before it launches but Time Warner is confident that it has things well in hand. Their first new brand marketing campaign in 20 years will be unveiled next year in 2015.
By Aiden Wolfe
Image Courtesy of Dave Winer – License