Could HBO ‘Go’ Direct to Consumers?


Time Warner (s TWX) has been aggressively touting its TV Everywhere strategy, which enables cable subscribers to view certain online content from cable networks that they’ve already paid for. And it’s invested heavily in building its HBO Go and Max Go video offerings so that partners like Comcast (s CMCSA) and Verizon (s VZ) can give their subscribers access to these value-added services.

But on today’s earnings call, an interesting thing happened: Chairman and CEO Jeff Bewkes didn’t outright dismiss the possibility of going direct to consumers with an online offering, saying the premium cable network could do so if its distribution partners don’t roll out authenticated services quickly enough. In response to an analyst asking if HBO could market its online offering direct to consumers, Bewkes said:

“[O]n the question you raised about HBO going direct, we do have the ability to do that. And it’s not something that we have decided to do today because… we have a very good relationship… [with] all the different distributors… If that doesn’t work well, or speedily enough, then we have the option of adding a direct sale of HBO.”

While Bewkes essentially said the company had no immediate plans for a direct-to-consumer offering, what’s surprising is that he didn’t dismiss the idea out of hand. After all, Time Warner — more than most other media conglomerates — has been aggressively banging the drum for authenticated video services tied to its distribution partners’ cable subscriptions. Along with Comcast, Time Warner originated the idea of TV Everywhere, and has been a big advocate of the initiative ever since. So the possibility of a consumer-facing online video offering seems like a bit of an about-face for HBO.

What’s clear is that if Time Warner does make a play for HBO subscribers with an over-the-top offering, it won’t be doing so by partnering with Netflix, (s NFLX) as cable networks Starz and Epix had. In fact, it would most likely be offering the service as a competitor to Netflix’s Watch Instantly streaming service. Time Warner executives have been fairly critical of other content owners for making their broadband video content available online through Netflix and Hulu. Referring to Warner Bros. digital distribution on the call, Bewkes said:

“[W]e absolutely evaluate everything… [but] we’re not going forward to sales and licensing agreements within like Netflix or Hulu in the context of what is best, in this case, for Warner Bros. on providing the most healthy revenue support for the licensing that we do because there a lot of things that have been proposed in “digital” that are really not in the interest of the studio… And as you can tell by the things we’ve done and not done, we don’t agree with some of the moves that our studio competitors have taken. We think it’s bad for the value of their content.”

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Shakir Razak


What that classic Media Aphorism:

Content is King.

Which is why some of those asset-splitters will be seen as so stupid, unlike the foresight/ambition of Comcast.

Of All the media Comapanies in the world, TW is probably best placed, bar the the unrealised Sony, to offer its content directly and globally.

$6-20 a month, cost a few cents per programme for direct distribution, users watching about 12 hours per week, and users across most of the western/english world without needing to worry about the complexity of rights-clearence that the networks own web-video sites have to constantly.

But this is Time-Warner that we’re talking about, a company that’s never historically missed an opportunity to profit from potential. anyone!

As for the fat old complacent Cable companies, much like the, at least born of innovation, Mobile Phone Networks, they will face the same path trodden by other legacy industries that thought they could charge for what wasn’t anymore neccessary, whether the early-internet incumbant telco ISP’s (until the flat-rate providers), or domestic Coal sellers.

We are having these discussions in a world where people, only a few for now, are using 1gb Broadband and 4G mobile networks. America might take its time getting there in the face of some of those vested incumbant interests, but eventually, the speed will improve for the public internet, just as fast as a single company was suddenly able to transform the package-model for mobile broadband with the launch of a single product (iPhone) worldwide.

kind regards,

Shakir Razak

Dan Agostino

I should amend that to say, this assumes the local cable co hasn’t asked for a waiver of that ban. Nothing in simple in TV it seems :).

Dan Agostino

@Ramin: In the US, it hasn’t been legal to require a higher tier of service in order to get a premium channel like HBO since about 1994 or ’95. You can add “Basic” service (which the FCC cost-regulates to be about $15-$20 a month), then add HBO, and of course the required STB rental or CableCard rental to get encrypted/scrambled channels.


Ramin Vaziri

Very interesting development. This is a sign of the future for content creators. They no longer need the cable/satellite/telco operators to distribute their content. I am a cord cutter who would enthusiastically pay for an internet HBO subscription. It is ridiculous that my cable company forces me to subscribe to an extended Digital Cable Bundle approx $80/mo before being able to pay an additional $10/mo for HBO. I wonder how much of that HBO subscription fee goes to the cable/satellite distributor and how much HBO keeps? HBO current video site is pretty impressive. Lots of good content in a nice player.

Alfred Poor

Here comes a la carte cable, which will be the end of cable as we know it. The sooner that cable accepts its future role as a data utility (like electricity and water), the sooner they will be in a position to maintain their physical infrastructure and survive the change to Internet-based entertainment delivery.


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