Maybe HBO Now Won't Be As Disruptive As You Might Think

One of the most interesting viewpoints about the new HBO Now online service comes from Alan Wolk, who has come to the conclusion that, really, cable operators can’t be too bent out of shape.

There are at least a couple of reasons why, as Wolk explains on The Diffusion Group’s Analyst Insights newsletter. The first of is that if you subscribe to HBO now, you might not be able to discontinue it without causing major problems with whatever cable package you have.

“Remember, HBO is rarely a freestanding add-on these days, but part of a Jenga-like construct where, if you pull out HBO, the entire Titanium Triple Play package comes crashing down,” Wolk writes. “MVPDs have a host of other levers they can adjust to keep HBO customers, as well. For example, they can lower the price of a package, add another 10MB of Internet speed for free, or give out two free years of HBO upon renewal. The possibilities are endless.”

So, he says, MVPDs won’t lose many current HBO subscribers from the TV service.

Secondly, he says, most cable operators want to get out of the set top business, because those things  “are dated, difficult (if not impossible) to update, unreliable, and the primary reason so many people complain about their pay-TV operator. Worse still, an MVPD spends $200 or more to roll a truck every time the [set top box] goes on the fritz or when a new box needs to be installed. Installers are unreliable, customers get angry, and the MVPD ends up looking bad –- it’s a no-win proposition for the operator and mess-in-waiting for the subscriber...”

He continues: "The MVPDs would love to see subscribers buy their own Apple TV, Roku, or Amazon Fire TV and simply provide an app. Or, the operator could sell a branded device, but make installation and maintenance the consumer’s responsibility.”

So it all comes down to you. The HBO Now app, in his view, could help you get into the set top (and set top repair) business. Welcome! Please put on the plastic booties.

The odd cable provider that thinks just the opposite is Comcast, which happens to be the biggest operator there is. It has been dumping millions into its X1 and X2 state of the art set top boxes. You’ve no doubt seen the commercials. Wolk writes that Comcast wants to make X1/X2 so dominant that other operators will use it as well, “creating a Comcast-centric universe that gives it control over the box and all the data that comes with it.”

Apparently, X1 and its next-gen X2 are vast improvements over the ordinary set-top box and Comcast is nothing if not diligent about its tech research, if not its timing. Still, consumers name Comcast (and its would-be soulmate Time Warner Cable) as the two most detested cable operators out there.   

But HBO Now screws up the big picture for X1 and X2, especially as others start to follow that lead. 

In fact, Comcast may think the same thing about HBO Go. It is the seemingly more benign app, since to get it, a consumer has to prove he or she receives HBO via cable or satellite. Virtually all major cable and satellite providers have arrangements green-lighting HBO Go.

Nonetheless, Comcast has kept HBO Go away from Amazon Prime and Sony’s PS3 and PS4 units, and Roku had to go to the FCC, where Comcast has some very big fish frying, before Comcast struck a deal and began allowing its subscribers to access HBO Go. I’ve asked about the Amazon deal, or lack of, for months and been told they’re still working on it. The legal department, apparently, doesn’t have an on-time guarantee.
5 comments about "Maybe HBO Now Won't Be As Disruptive As You Might Think".
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  1. Leonard Zachary from T___n__, March 13, 2015 at 4:31 p.m.

    Who wants to pay $100+ for the Sundae? Who wants to pay$100+ just for the nuts? Piracy will not be resolved with Jenga frameworks on both payTV and digital. Younger audiences are way too digital savy.

  2. Karim Sarkis from Sync Media, March 15, 2015 at 3:50 a.m.

    The disruption may not be in the ability of existing subscribers to exit any packages they genuinely want to keep (regardless of how much unwanted stuff the operator has thrown in), but in the ability of new subscribers to avoid those packages altogether.

    Betting on set top boxes is a risky move when DVR functionality can easily go to the cloud (when rights holders allow it) and when TV sets are absorbing set top box and internet connectivity functionality as they turn into streaming devices.

  3. James Smith from J. R. Smith Group, March 16, 2015 at 9:08 a.m.

    Karim, I tend to agree with you regarding subs using this or similar options being primarily motivated by "avoidance." This could also be interpreted as subs gaining control (vs. the tier system) and a form of consumer pressure to spur ala carte with MSO's (& nets) that are feverishly attempting to retain the old business model for as long as possible. What do you think? Jim

  4. Karim Sarkis from Sync Media, March 16, 2015 at 9:19 a.m.

    Pressure is definitely building up Jim. Partly from subscribers as you mention and partly from channel owners not wanting to leave the direct-to-consumer game to OTT pure plays like Netflix. As more and more channels create their version of HBO NOW, cable companies will have to alter how they offer their content if they want to retain and grow subscribers. Paradoxically, it may be as (or more) expensive to subscribe to all the individual OTT services so the bundling/tiers may survive, albeit in a new form that gives more choice to subscribers as to what to include.

  5. brian ring from ring digital llc, March 16, 2015 at 2:54 p.m.

    Been working across OTT and legacy TV for 15+ years. The terrible pay TV set-top UX has been held up by the Bundle. The Bundle has two crutches: (1) Sports & (2) HBO. Sports biz is a natural for OTT, and so it's already headed down that path. HBO could've stayed in the tent with a klugy, confusing & sub-par viewing experience - like SlingTV. But they didn't. They went the insanely great path with Apple's Tim Cook & Eddy Cue fully on board. This is a big deal. There's only one question left - when will eps that just aired be available on the service.

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