Top-10 Reasons Why HBO Might Have Done The Roku Deal
Early last week, HBO announced that HBO Go, its on-demand streaming service, will now be available on Roku set-top boxes. However, the free service will only be available to those who have a conventional subscription to HBO through a cable, satellite or teleco operator (except for Time Warner Cable; the former siblings haven’t fully made up since their split into separate companies, apparently).
Since the HBO Go on Roku service is only available to those who already have a subscription and availability on their conventional set-top box, some folks are wondering why HBO went to all of the trouble to do this deal. I have some ideas and opinions on the matter, though no inside insight. Here they are:
It’s time to test and show off the “TV Everywhere” vision -- one subscription, access everywhere – that Time Warner CEO Jeff Bewkes has been touting for the past several years. Doing it on operator-owned devices and services, as the company has done in the past, is one thing. Doing it with a third party device like Roku (a spin-off from Netflix) is entirely another.
Time to build direct relationships with TV viewers. No one knows what TV will look like in 10 years, but most believe that it will involve more on-demand streaming and more retail relationships between viewers and programmers. Good time to start establishing direct relationships if you’re a programmer like HBO.
Good way to let operator partners know that you are ready and able to go “a la carte” direct to viewers. The relationship between programmers and operator/distributors is all about leverage and frequently involves some pretty heavy negotiations. Showing off the capability to go direct to the viewer with HBO Go can’t hurt HBO in its subscriber fee negotiations with operators in the future.
Avoid getting lost in channel surfing clutter. The explosion of channels means that premium paid programming -- either individual channels or in bundles -- finds it harder and harder to stand out and be found by viewers. Adding visibility on emerging set-top boxes and new interfaces, like Roku’s, can only help HBO stand out.
Now is the time to participate in, and control, emerging TV user interfaces. Following the last point, new set-top boxes and new remotes -- from Google TV to TV-based apps to iPhone remotes -- are likely to mean new channel lineups and new ways to find programming. Now is the time to start staking out ground in this emerging real estate.
Platform to offer up libraries of non-linear, related video content. I suspect that HBO doesn’t want Netflix to be the only player in on-demand streaming of video content. Operator on-demand systems aren’t as robust as Web-based services and apps can deliver, which is why HBO already does it on the Web. Roku is just another distribution platform for that.
Build out internal tech chops. Yahoo is a media company that won’t admit it, and keeps calling itself a technology company. HBO is a media company that knows what it is, but is also trying to build up its in-house expertise in technology development. The more of this it does, the more likely HBO will control its future.
Get to flex consumer marketing muscles. When you spend all of your time negotiating with producers and directors and system operators, it’s fun to push out new consumer products and interact with audiences, particularly if you’re the ones who brought us: “It’s not television. It’s HBO.”
Create model for non-U.S. and emerging markets. China’s biggest video distributor isn’t a cable company, but a Web video company with 300 million viewers each month for an average of one hour per day. If you want to play in markets like that, you’d better start streaming. Markets like China, India and Indonesia will have very different video distribution eco-systems than we have in the U.S.
Closer to gaming platforms. People can play games from emerging set-top boxes, but rarely straight from cable operator boxes. HBO is already involved in video gaming and will certainly get more and more involved in the future. Lots of ways to tie HBO Go and gaming when they’re on the same box.
What do you think? Why might HBO have done the Roku deal?