Streaming video is here to stay, and HBO has some of the most sought-after content out there, and 36% of American TV viewers are interested in a paid subscription to a stand-alone HBO, according to Horizon Media's Finger on the Pulse survey.
Those who already subscribe to HBO (49%) are moderately more interested than the general population (36%) in this service. But contrary to what you might expect, those who don’t currently pay for cable or satellite service of any kind are even less interested. Only 28% express interest.
"This research shows that HBO is right to proceed with some caution," says Kirk Olson, VP of TrendSights at Horizon Media. "Price standalone subscriptions too low and the new offering could cannibalize revenue streams from MSO distribution. But price them too high and cost-conscious TV consumers lose interest."
Indeed, price is the biggest sticking point. Most want it for $10 or less; A solid majority (75%) would only pay $10 or less per month for a stand-alone HBO subscription. Younger viewers are more inclined to open up their wallets. Millennials are more than twice as likely as the general population to willingly spend more than $10 per month (48% vs. 25%).
"Stand-alone HBO can deliver on immediacy and access to its own premium content, but it won’t deliver on the diverse choice and wider access people increasingly expect," says Dave Campanelli, SVP, director of national broadcast at Horizon Media. "So, it’s natural that consumers would ask themselves whether the subscription fee for stand-alone HBO would end up costing the same or even more while also limiting their choices. In five to 10 years, I would expect the share of people interested in services like stand-alone HBO to grow. It’s a new and exciting way to access premium entertainment. But for now, in post-recession 2014 America, cost consciousness trumps newness."
Despite consumers’ cost concerns, there is a potential bright spot. Horizon's research finds that moderately greater interest among Millennials and Gen Xers could help make the stand-alone HBO model more economically viable; 54% of millennials are interested, as are 43% of Gen Xers. “That’s a good sign since the highly coveted 18-49 demographic is all millennials and Gen Xers,” says Campanelli. “If HBO introduces ad support in its standalone service, it looks like demographic desirability would be there for advertisers even if big reach numbers are not.”
Still, content is key to HBO's success.
For current HBO subscribers, movies (63%), "Game of Thrones" (37%) and "True Blood" (37%) are the top 3 drivers. For non-subscribers, the drivers are similar – movies (36%), "Game of Thrones" (16%) and "True Detective" (14%). In fact, instant access to blockbuster titles like these is on-trend. "Entertainment subscription services become most compelling for today’s connected and curating consumers with 'all you can stream' models like Spotify," says Olson.
"The number of paying customers is growing rapidly in streaming audio. That’s because streaming audio services are perfectly aligned with a trend we call ‘NOW-it is’ -- the growing consumer expectation that 'now' is the only acceptable delivery time-frame. It’s an epidemic and it’s driven by values of immediacy, access, and choice," he adds.
Although HBO’s new service may break from traditional business and delivery models, tried-and-true viewing habits remain popular. When asked how they would watch via a standalone HBO service, most said they would stream to their TV (80%) as if they were watching through a cable subscription.