Will HBO Streaming Service Be Modest Niche In Changing SVOD Business?

HBO’s stand-alone streaming service might start out very different than some nervous cable operators might believe -- it could be a more of  a niche-like operation.

Only the marketing of that new service will tell the true story -- at least initially.

In talking up “10 million broadband-only customers,” Richard Plepler, chairman/CEO of HBO, may believe the long-time anticipated stand-alone streaming services from premium TV channel is looking more for younger consumers, especially those who may have never have been cable subscribers.

In speaking at an investor meeting, Plepler also mentioned those “80 million subscribers” don’t have HBO currently -- and, of course, those TV customers come in all shapes and sizes.

Still, HBO, overall, looks to find a new spin on things. That’s why, at the same time of the new service, HBO says it will start up a big marketing campaign -- the first time in two decades -- broadening out its efforts that have mostly played on its pay TV distributors platforms.



And how will HBO price the new HBO over-the-top service? With Netflix $8.99 per month per subscriber, will HBO will be looking to price around the same level -- or lower than what it charges customers who buy through cable/satellite/telco operators?

Reed Hastings, chief executive officer of Netflix, says of HBO decision on the streaming service is a “sensible” thing to do, predicting both streaming services will prosper as consumers move to Internet TV.

But how will HBO existing partners think about this? HBO will sure to push the fact HBO’s initial target of those broadband-only homes were never cable subscribers in the first place -- or were never going to be cable subscribers. That’s where those young-skewing consumers come in.

That might be discouraging to pay TV distributors like Comcast, DirecTV, Dish Network, Cablevision Systems Corp. and Charter Communications. But the truth is higher monthly pay TV packages -- in the $80 to $120 range continue to be a negative for the business -- perhaps more so than ever.

But if you want to think about discouraging news -- for both Netflix and HBO -- Netflix stock took a big hit on Wednesday, down a whopping 25%. On the earning news, Netflix came in under expectations for subscription growth.

What does one make of that? One thing for sure: HBO now moves into a changing marketplace.

Editor's Note: The Oct. 13 TV Watch column, "Even Before Nielsen Revelations, New Broadcast Shows Weren't Doing So Well,"  misidentified a new ABC drama. The correct name of the show is "How to Get Away with Murder."

1 comment about "Will HBO Streaming Service Be Modest Niche In Changing SVOD Business?".
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  1. Douglas Ferguson from College of Charleston, October 17, 2014 at 7:52 a.m.

    HBO existing partners will likely be disgruntled, but what can they (or any disintermediated company) do about it? Legacy linear TV is rapidly becoming the equivalent of the major city newspaper of the 1990s, i.e., headed for life support. I prefer to focus on the HBO customer, who should appreciate access to the entire HBO library instead of waiting to record one of its handful of linear channels.

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