Streaming HBO services changes the game for cable providers

BY Allconnect | Fri Oct 17, 2014
Streaming HBO services changes the game for cable providers

HBO announced on October 15 that it would be unveiling a stand-alone streaming service in 2015, according to The Wall Street Journal. The news was a delight for "Game of Thrones" addicts who no longer have to camp out on a buddy's couch on Sunday nights. Service providers, however, were less overjoyed to find out that HBO will now be providing customers with incentives to circumvent the cable company. The new service will have a much greater impact than threatening cable company revenues tied to HBO subscriptions. The success and popularity of HBO's new streaming service has the potential to upset the Pay-TV status quo for good.

Old allies turned rivals
Observers may find it surprising that HBO waited so long to launch its own independent VoD service, especially considering the popularity of HBO Go. However, the relationship between cable television and HBO is storied history. In the early days of television, "cable" merely referred to a method of transporting television signals that was quickly becoming commoditized. Enter HBO and satellite TV-only content in the 1970s. The concept of premium television was in many ways pioneered and developed by HBO, to the benefit of broadcasters (and subsequently, cable providers). As HBO pushes toward the future, the industry it helped found looks on with a mix of apprehension and disappointment.

Streaming uncertainty
Despite a bevy of reactions from consumers and industry experts, HBO has been mum about the details regarding its new VoD service. NPR points out that network has avoided equating its new service with HBO Go, causing some to wonder if the new streaming service will include access to HBO Go's massive archives of older content. Potential customers are still in the dark as to which current HBO shows will be available on the new streaming service, or how much the new service will cost. It seems that many of these particulars will be determined by the type of relationship that HBO would like to maintain with its cable provider partners.

Inevitable disruption
HBO has stressed on multiple occasion that its plans to sell its product directly to consumers is not an attempt to disrupt the business model of status quo cable providers. Competition seems inevitable, however, given increasing popularity of of cable cutters. Premium cable and sports programming were supposedly Pay-TV's final bastion against disruption from Over-the-Top content, but it seems that the legacy systems will soon be under fire. CBS announced its own stand-alone service the day after HBO made its own announcement, according to the network's website. CBS's press release is further proof the reality that traditional relationship between cable provider and consumer has been ruptured.

This disruption may have even wider-reaching consequences if HBO's move to video-on-demand attracts more converts to the cord-cutting movement. New interest generated in HBO's VoD network could easily translate into increased curiosity about over-the-top services like Netflix, drawing even more customers away from traditional TV.

Amazon's sour grapes
Cable providers aren't the only companies disappointed by HBO's announcement. The release of HBO's own streaming service may spell danger for the proposed collaboration between HBO and Amazon. Forbes points out that the two companies were in the works to bring HBO content to Amazon Prime as recently as last April. A subscription price model through HBO seems far more attractive for consumers than paying for the same content a la carte through Amazon. Chances are there won't be much market left for the Prime/HBO channel even if it still comes to fruition.

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