HBO’s announcement Wednesday to offer a standalone streaming service could be a game changer for pay-TV. Starting next year, the media company will sell streaming as a standalone product. The move will give anyone with Internet service access to HBO content, whether they are cable subscribers or not. The change could create a dramatic shift in way the cable television industry does business.
For years, cable providers have capitalized on a structure that forced channel bundles on customers who only view a portion of the channel offerings. The network’s Chief Executive Richard Plepler said it was time to remove barriers to people who want HBO. He announced the plan during investment meetings held Wednesday by parent company, Time Warner Cable. But Plepler did not provide many details about how the service would be offered, how much it would cost, or what options would be made available.
Still, the news is already causing a ripple effect in the cable industry, and could position HBO as a veritable opponent to digital entertainment platforms like Netflix and Hulu. The statement comes as welcome news to subscribers who seek freedom from the high prices and restrictions of traditional cable plans. Public interest groups say consumers will be able to pick what they watch and have content companies vying for their business.
The network’s current streaming service “HBO Go” which launched in 2010, currently requires authentication and a cable subscription. The changes would remove those restrictions and allow HBO to stream current and older programs including Game of Thrones. Millions of people have already “cut-the-cord” by canceling their pay-TV subscriptions. As many as 10 million American homes are broadband only. Of that number, nearly 50 percent of Americans stream television shows at least once a month and the number is growing.
Heralded as one of the most valuable pay channels in cable and satellite packages, analysts say this could force the hand of pay-TV operators. The company has long criticized its distribution partners for not giving it a big enough cut of paid TV subscription profits. Plepler described the service as a counterpart to the network’s current offerings and said HBO is targeting the millions of high-speed Internet subscribers who do not already subscribe to a pay-TV service.
Pricing and packing plans have not been revealed and could dictate if the industry shifts its business model. HBO plans to start off selling a standalone streaming service in the U.S and two other countries and there are plans of seeking new partnerships. So far this year, HBO has added more than 2 million subscribers.
Analysts say video streamers are not missing out on their entertainment fix, watching nearly 100 hours of video every month. The digital video service Netflix, which has 36 million customers, has incorporated original programing and buying the rights to popular cable network shows to help feed that trend.
Shortly after Wednesday’s announcement, Netflix posted lower than expected third quarter growth, but leadership remained optimistic that the HBO plans would have little effect on the company’s future. There is no word on whether there will be a name change or how the new game plan affects the streaming deal HBO recently signed with Amazon.
By Angela Jones
Photo by Rogier Noort – Flickr License