Ready, Set, HBO GO: Premium Network to Offer Standalone OTT Service in 2015

by Glenn Hower | Oct. 15, 2014

Game of Thrones, Girls, and Last Week Tonight with John Oliver could be coming to a device near you, whether or not you have a pay-TV subscription. This morning at a Time Warner, Inc. investor meeting, HBO chief executive Richard Plepler announced that the network would launch a standalone over-the-top service as soon as 2015. The jump would not be drastic from a technology standpoint, as HBO currently delivers content through its HBO GO app. However, a move into the direct-to-consumer space is a drastic step away from the deep-rooted pay-TV subscription space HBO currently occupies.

HBO has produced a wealth of popular and critically acclaimed original content from The Larry Sanders Show to Sex and the City and The Sopranos. While the content on HBO today remains popular, access is an issue. Premium network subscriptions have fallen in the past two years from 38% of pay-TV households to 30% according to Parks Associates consumer research. In addition, the younger demographics for which their programs are popular are less likely to have pay-TV service. Among broadband consumers age 18-24, 80% subscribe to a pay-TV service compared to 82% to 90% for older age demographics. HBO is eager to bolster its numbers and attract an audience that was previously inaccessible through legitimate means. While pirating and credential swapping is likely to remain an issue with some viewers, consumers are loath to become pirates and a legitimate and affordable service may compel them to subscribe. Demand for HBO content over-the-top exists, with 20% of broadband consumers indicating they would pay $9.99 per month for access to HBO GO, an opportunity that is difficult to ignore.

Plepler declined to provide further details, so it is unclear what content may be included in the standalone service and how much it will cost. However, HBO’s move into the OTT space shows that services like Netflix and premium networks are becoming more and more like each other. While it is unlikely that HBO’s new service will lead to an immediate mass unbundling of television networks, pay-TV providers should monitor the situation closely. If HBO’s OTT service is successful, it may pave the way for other networks to offer standalone services outside the pay-TV status quo.



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