HBO Will Launch Standalone Online Service That Doesn't Include Cable Sub

Perhaps I exaggerate, but I do believe I will be giving up my expensive cable contract with Comcast next year.

That’s because HBO CEO Richard Plepler announced today at an investor presentation that HBO will begin selling a digital version sometime in 2015 that won’t require me to first subscribe to HBO on cable. That’s the way HBO Go works now.

Plepler didn’t seem to elaborate, but the idea of a standalone HBO digital presence is ripe with possibilities and has been rumored for months, with some urgency in the last couple of months. 

If HBO is going there, you can pretty well bet that Showtime will follow. And if those two are there, that puts even more pressure on Netflix to improve its over-the-top service. And for Amazon Prime to up its output. And so on.

Oddly, you can credit Rupert Murdoch for this -- and believe me, I hate to credit Rupert Murdoch for anything good, although I’m much more generous about blame.

But it was Murdoch’s 21st Century Fox that made a $80 billion bid for Time Warner this summer, which CEO Jeffrey Bewkes repelled by claiming the existing company could produce more revenue going forward. So this new development is at least a result of the torch Murdoch held to Bewkes’ backside.

One of those big revenue generators Bewkes could point to is HBO, which pushed out almost $5 billion in revenue last year, without even touching the millions of would-be subscribers who wouldn’t pay the price of cable, or the cable version of HBO.  

To get HBO, cable subscribers also have to buy the package of other channels they may never, ever watch. Everybody knows that, painfully.

Re/Code’s Peter Kafka also speculates this HBO announcement won’t go down very easily over at Comcast, and he predicts the cable giant will retaliate.

But I wonder if that may be why Plepler said it today -- so everybody in Washington knows the plan, too. Comcast still has to jump over hoops to get its massive merger with Time Warner Cable approved, and what better place to get on-the-record guarantees against retaliation than when Brian Roberts has to testify before the FCC and a bunch of puffy legislators?

As a content disruption, this is a good one. It effectively puts online video distributors squarely at the tippy top of the content chain, with the exception of sports. (It also makes online video's best purveyors places where advertisers aren't allowed.)

But I wonder how much Comcast or other cable companies really have to worry about.

Earlier this year, Bewkes got all misty about the Netflix revenue model, and noted that HBO “could deliver their signal exactly” as Netflix does. That is, without paying a cut to cable operators.

What goes around comes around — with the same price tag.

Leichtman Research Group a couple months ago calculated that the largest operators, for the first time, have more high-speed access customers than they do video subscribers. Since cable companies control the pipe into millions of homes, you have to believe HBO will be paying cable operators a slice of the fee they charge for their online service.  So this shift just takes money out of one pocket and puts it into another pocket that’s also not yours. Which actually is in the great tradition of video commerce.
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