HBO says no, for now, to fans who want a web-only option

http://mediadecoder.blogs.nytimes.com/2012/06/06/hbo-says-no-for-now-to-fans-who-want-a-web-only-option/

by whyenot • 14 years ago

67 82 14 years ago

mediadecoder.blogs.nytimes.com

seanp2k2• 14 years ago

Typical entertainment industry arrogance. They won't offer it until it's very obvious that they're losing out by not having it as an option.

Why lead when you can follow and still stay rich?

mtgx• 14 years ago

Usually, when there are such transitions and the big guys wait it out, it's them who lose out in the end.

firichapo• 14 years ago

Follow? its more like standing in the same place and not moving. And still getting rich. And once they decide to move forward they will a) fail at it b) throw fits because they realize that they are at the end of the rope at that point.

sliverstorm• 14 years ago

Why lead when you can follow and still stay rich?

I think that's a little unfair. HBO is clearly leading in terms of show quality.

trimbo2• 14 years ago

I know it probably won't happen this way, but I hope Netflix and Amazon pull together awesome original content and smoke these guys.

technoslut• 14 years ago

They may but what is the guarantee they will watch? Take a look at the top rated shows, music and films. Most are garbage.

The illusion that quality will reign supreme is just that. Since the 90s crap TV shows have got the ratings.

trimbo2• 14 years ago

Hm, I see your point except that ratings-based (i.e. ad-sponsored) content is not what we're talking about here. We're talking about paid, premium content. Ratings don't matter, only the bottom line does.

jonny_eh• 14 years ago

As long as HBO is owned by Time Warner, and the money left on the table from not offering an online option is less than the amount they're making from their own cable offerings, they won't change.

lytol• 14 years ago

Time Warner Cable is not owned by Time Warner. They are an entirely independent company that continues to license the name. I just found this out recently, so thought I'd share.

chawco• 14 years ago

This is the future of this market. If they're not willing to move there, someone else will and eat their lunch. I like HBO, and they still have plenty of time to make the move, but if they fail to do so I won't mourn them.

gtCameron• 14 years ago

How? Its not as simple as building a website, we're talking about spending millions of dollars to create quality content that people actually want to watch.

Netflix is going to try, and they succeed then I'm sure that HBO will think a bit harder about it, but right now there isn't much to be gained from them being the one to take the leap.

bgentry4• 14 years ago

It's cool, they don't want my money so they won't get it. I'll keep getting their stuff from Usenet for free.

flyinRyan5• 14 years ago

The issue is, to get the few hundred you would offer, they would have to give up the millions that the cable companies offer. The last time I looked, if every single person who pirated HBO shows were to pay per episode (wouldn't happen, many would still pirate) it still wouldn't be as much as what they get from cable now.

jsprinkles2• 14 years ago

You're assuming, incorrectly, that cable would dump them as soon as they offered a Web option.

tokenizer• 14 years ago

But that's not looking at any cable subscriber. I'm sure many people get cable exclusively for HBO shows.

It's all a matter of when. They'll need to see some good numbers before they start providing their own channel for their content on the internet.

bgentry4• 14 years ago

No, my few hundred does not "lose them millions". Their relationship with cable companies is very profitable for both sides, and I find it unlikely that the cable companies would want to simply end it outright.

Also, in addition to a few hundred from me per year, they would be getting a few hundred from hundreds of thousands of other people willing to pay for access without cable or in other countries with no HBO option.

As I said, I respect their right to make business decisions I disagree with. I will happily go on downloading and not giving them a dime, because I am never paying for cable again.

guard-of-terra7• 14 years ago

But why it should be my (or parent) problem?

If they can't do their job by figuring it out, why do they feel entitled to anything?

tomjen3• 14 years ago

Then they should expect piracy to continue.

AUmrysh• 14 years ago

And thousands now feel completely justified in pirating their shows. I can't help but think that HBO is losing out here by not listening to their customers.

phene• 14 years ago

I certainly do, since I will never purchase a cable subscription and it costs me internet access and HBO nothing for me to pirate their shows.

pavel_lishin• 14 years ago

The "completely" part seems a bit excessive. You could always pay for cable and buy a DVR.

(Full disclosure, I download content, so my horse is not particularly high, and I'm not even on it right now.)

jaems335• 14 years ago

Or not watch it all. Crazy idea.

bgentry4• 14 years ago

He said they feel justified. That's different from saying they are justified.

patrickk• 14 years ago

What if you don't live in the US?

You hear about these fantastic shows coming out of the States, try to find where you can watch them...wait for months if you are lucky, otherwise pirating is your only option if you want to see them. A highly seeded, HD torrent is usually available hours after the show aired in the states. That's what HBO is really competing with. Until they address this latent international demand, piracy will continue. Most internet users are outside the US[1].

In a way they should be grateful they're producing great shows that boost the HBO brand (for free), at least then they can monetise the pirates down the line if they're smart. A bigger problem would be if people simply started watching shows from rival networks.

[1] http://www.google.com/publicdata/explore?ds=d5bncppjof8f9_&#...

kittxkat• 14 years ago

Not if you live outside the US.

I honestly think that "unavailability" is the cause of 90% of pirating. Not because people don't want to buy stuff, they simply can't.

quadratic_r• 14 years ago

So this is how they want to play this?

Ok.

UNLEASH THE TORRENTS!

objclxt2• 14 years ago

Pirating an HBO show is one way of showing your displeasure: I think a better way is to vote with your wallet and actually give the money you would have paid HBO to another provider who's investing in original content for web-only distribution (like Netflix).

I'm not saying don't torrent HBO shows: go ahead - but reward companies who are trying to come up with creative ways to get content distributed online. Torrenting a HBO show rather than subscribing deprives HBO of revenue: giving your money to a competitor not only deprives HBO of revenue, but provide a competitor with the finances to take them on.

Jun8• 14 years ago

This is a textbook case of innovator's dilemma, I think.

"... and there’s no way that HBO could make up in online volume the number of subscribers it would lose from cable"

This assumes two things:

1. That all cable companies immediately will cut HBO from their lineups as soon as it offers web only deals. This is insane! What else will keep up the $100+ cable offerings? They have nothing else other than sports.

2. Where does this "no way" argument come from. HBO's cut from each cable subscriber is, I think ~$10. If it offers, say, a $40 all you can eat online option, how much of that revenue will go down to infrastructure, etc?

With Netflix and Amazon rising on one side and more and more of the younger demographic watching web-streamed shows, HBO will change, the questions is: will it take five years or two?

jaems335• 14 years ago

What web-streamed shows come even close to the quality of HBO produced shows? I'm not trying to be argumentative, I'm curious. Yahoo produces a lot of their own 'shows' but it all seems amateurishly directed that I can't bother to watch a second of it.

Edit: I think funnyordie videos are actually really well produced.

objclxt2• 14 years ago

It's difficult, because low-budget web shows often have quite a short turnaround, whereas a high budget show can take several years to get off the ground (at least a year in development, and a year to write, shoot, and edit).

For example, Netflix are shooting for (comparatively) high-budget original content with several shows due to drop in 2013 (like Arrested Development) - there's also been a move towards joint production deals where the shows are produced for streaming on a service like Netflix in the US but then sold for TV broadcast in other countries.

natural219• 14 years ago

Dr. Horrible's Sing-Along Blog comes to mind. It won an Emmy in 2009.

jinushaun• 14 years ago

I watch full episodes of How I Met Your Mother for free on cbs.com. No need for Pirate Bay. Unless, of course, you're talking about web-exclusive shows.

gdubs• 14 years ago

People may downvote this but I'll say it anyway: PBS has done a pretty damn good job with Downton Abbey, especially in providing a really simple and well functioning streaming player.

roc• 14 years ago

My guess is that the timing is entirely contingent on their existing contracts.

My guess is that HBO's contracts with cable providers have terms that are simply incompatible with a direct-to-consumer offering. If they were renegotiated at any point in the last five or so years, I would think it likely that such clauses exist. Perhaps not with every provider, but with enough to make things problematic prior to the next round of re-negotiations.

e.g. Suppose something in the contract indicates that Comcast only kicks back to HBO a fraction of the cheapest available consumer-facing price. (Protecting Comcast from HBO's turning around and cutting a sweetheart deal with another cable operator the next day)

In which case HBO's $10 cut of the $17ish that Comcast charges [1] would itself erode should HBO make a hypothetical $12/mo offering available.

So even if HBO's cable subscriber numbers held steady, they may well be facing a huge drop in revenue simply by making an economically-feasible direct-to-consumer offering. [2]

Or, it could be a more direct clause simply prevents any direct-to-consumer offering.

But that situation sounds the most likely to me. It would have been in the cable operators interests to ask for such clauses and in HBO's interests to concede. [3]

[1] Numbers based solely on prior articles I've read. I haven't had cable, let alone HBO, in quite some time.

[2] I think we can all agree that even HBO would be dead-in-the-water among cord-cutters at anything north of $15/mo. And anything between 10 and 15 gets debatable.

[3] Even three years ago streaming was not 'ready' to the point of justifying a fight with cable operators. Even now it's anything but a sure thing. Particularly when there hasn't been a real break-out leader in the IP-set-top-box space. They'd need to sign and support a half-dozen deals and platforms to give this thing an honest shot at the moment. Going slow with HBO Go is a very shrewd way to ease into the platform fight before a crush of public interest descends on a hypothetical consumer-direct offering.

joelhaus• 14 years ago

Two more risks: net neutrality and data caps.

If cable companies were to ever concede a direct-to-consumer offering from HBO, you can bet that HBO gets a smaller share of the cable subscriber revenue.

Without legislation protecting competition, the cable companies can easily stifle online competition with data caps and violations of net neutrality principles... this is likely because it is in their economic interest (albeit, in a subtle fashion) to do so. My guess is that HBO understands how much this would hurt their bottom-line just as well as SONY does[1].

Lesson: lack of broadband competition harms the consumer and stifles innovation.

[1] http://www.theverge.com/2012/5/2/2993265/sony-iptv-plans-com...

ender7• 14 years ago

Dear Mr. Stelter: Please link to the actual tweets. This is not 1972. I don't need you to read pieces of them back to me.

crb• 14 years ago

I had to dig to find it, but it seems to be this one: https://twitter.com/HBO/status/210390531623227392

damoncali• 14 years ago

This will all crumble when live sports are on iTunes (or whatever service you care to use).

staunch• 14 years ago

What if it was an add on to Netflix, any chance those numbers would be sufficient?

ConstantineXVI• 14 years ago

Given Netflix (and to a lesser extent, Hulu and AmazonVOD) explicitly has HBO in their sights, this sort of arrangement is highly unlikely.

pwthornton2• 14 years ago

I wrote some brief thoughts on this: http://interchangeproject.org/2012/06/06/hbo-doesnt-want-you...

Essentially, HBO will eventually fall and start offering content available for streaming. It's just a question of when. This is where the market is headed and even cable companies are getting into the streaming game.

In the meantime, I'd settle for an HBO Go app that wasn't junk.

brockhand• 14 years ago

I don't use the HBO Go application too often, but what problems did you encounter or what would you add?

pwthornton2• 14 years ago

The biggest problem is the lack of caching of shows for offline use. You have to have an active Internet connection for the app to even work, making it worthless for most traveling. Beyond that, to get good video, you need a very robust connection, ruling out hotel wifi, coffee shop wifi, plane wifi, train wifi, etc.

Basically, the only place I can use HBO Go and get a good experience is my own house.

Why it's called HBO Go is anyone's guess.

tlowrimore• 14 years ago

Who needs HBO? Let's create incentives for the writers/directors to disseminate their work via alternative channels. Why the hell should HBO have a strangle-hold on that market?

wtdominey• 14 years ago

I recently downgraded my Comcast service because our monthly bill had reached ridiculous heights, and in the process had to let HBO go. Losing HBO was the hardest pill to swallow, but I'll now just wait for the DVDs or streams to hit Netflix.

lukeschlather• 14 years ago

Am I misreading Mr. Lawler's statements, or is the pay-TV industry colluding to prevent HBO from selling to other markets? I feel like an antitrust investigation is in order. (Overdue, in fact.)

mikeryan• 14 years ago

It's not collusion. Its a carriage deal. HBO wants distribution on the cable operators lines. The Cable Operators want HBO. So they do a contract which precludes streaming via the internet. These contracts are standard across the industry and in fact standard across almost all industries with products and distribution (see liquor distributors).

HBO is free to distribute via the internet if they so choose and the cable operators are free to stop distributing their content.

gte910h• 14 years ago

However, the cable operators are beneficiaries of monopolies, so there may be anti-trust issues at hand (using their monopoly to control distribution of the 3rd party service).

samolang• 14 years ago

Ironically, this is probably making HBO more money as it gives them stronger bargaining power with the cable companies.

AJ0073• 14 years ago

HBO's risk now it two-fold:

#1 Netflix, Amazon, Hulu, or (gasp) Google start outspending HBO on serial shows. The next show of the caliber of "Game of Thrones" or "Sopranos" is not offered through HBO.

#2 Consumers fail to see why they should be paying for HBO, or even want it. You could say a #1 3-4 times, combined with a failure to produce a notable show for a while, would kill HBO's desirability as a brand.

What HBO's management is doing is managing for death. This is what you do when you have a company with a passing business model to keep it as profitable as possible for as long as possible. In some ways you could imagine HBO as a porn company 8 years ago that primarily produced DVDs. Their business is still profitable and glamorous, they are mostly ignoring the pirates, but their real enemy is right around the corner.

HBO still has the possibility of transitioning. People care about HBO, thus all these stories about it. What they've done is tell their competitors "come get us." (alternatively HBO could just be calling their bluff and has full plans ready to switch to a web/mobile version)

tptacek• 14 years ago

HBO is already facing down that risk from FX and AMC, two rival channels owned by different companies offering comparably high-quality shows on basic cable.

My point isn't that this moots HBO's sensitivity to (say) Netflix doing the next Game of Thrones, but rather that it's unlikely HBO is going to move to preempt that. HBO does not appear to have reacted to Mad Men, Breaking Bad, Justified, or Sons of Anarchy as existential threats to their business.

If Netflix is the threat that is going to motivate HBO to go direct to consumer, they're going to have to put their money and their execution where their mouth is first. I have my doubts that they're equipped to pull that off, because I think they have an adverse selection problem: for prestige reasons, the best content is going to hit HBO, then Showtime, then AMC, and so on down the line.

waterlesscloud• 14 years ago

Talent will go where they are given money and freedom, so it's quite possible for Netflix to compete with HBO etc if they provide enough money and enough freedom.

Having said that, Netflix having 5 or 6 top-notch shows is no real threat to HBO, no more than AMC already having 3 or 4 top-notch shows is.

As long as HBO has their handful of shows people want to see, they don't care if a few other distribution channels also have shows people want to see. It doesn't hurt them, not even a little. A case could be made that it even helps a bit in terms of raising the prestige of the medium. There's a definite sense right now that the real gems of Hollywood are on television rather than in the cinema. It's a golden age, of sorts.

There are other factors as well, such as Mad Men sucking up AMC's money from other shows, that limit the threats the other networks can pose to them.

gigawatt• 14 years ago

Coincidentally (or maybe not), FX and AMC don't really offer streaming of their shows either. FX used to be great about it, but they've clamped down in the last year or so. AMC has always been uninterested.

encoderer2• 14 years ago

HBO turned-down Mad Men. In the recent past Thrones, Veep and Girls have all debuted to critical acclaim and ratings success.

Anecdotally, from what I've read, show runners love HBO.

Anybody who thinks HBO is at risk either isn't paying attention to it, or just has tastes outside the mainstream. They have among best original content -- scripted shows, comedy specials, 'reality' shows, documentaries, and movies -- on television today. And have. For the last 15 years.

nicholassmith• 14 years ago

Hey, who can blame HBO, they like their business model. It works, it's made them millions.

Except if they don't get ahead of the curve they'll find that most people have gone down the routes of waiting for it to get to NetFlix, pirating it, or not giving a damn at all. Bye bye millions.

IgorPartola• 14 years ago

Hulu has some great originals such as Spy and Battleground. Reward them!

This is HBO's loss. They could be making money by partnering with the likes of Roku, Microsoft and Sony. Instead they are going to let dinasaurs like Comcast and TWC drag them down. I tried writing to HBO a while ago. They did not bother responding. I cannot help but feel quiet satisfaction knowing that they are losing so much money.

grandalf• 14 years ago

HBO is the only reason I've ever signed up for cable. This is probably partly contractual and partly demographic. In a few more years it will probably start to make financial sense for HBO to offer its shows w/o requiring a cable subscription.

bsphil• 14 years ago

Didn't the VP of HBO also think the Internet was a "fad"? Memory is a bit fuzzy there.

ef4• 14 years ago

I think they're failing to appreciate the forces of habit and culture. The longer they wait to offer a legitimate option, the more people will already be habituated to piracy and embedded in communities that exist for piracy.

Or to put it another way, they're doing an excellent job of helping sell the idea of piracy to people who probably otherwise wouldn't bother. Once those people get used to it, it will be that much harder to sell them a pay service.

HBO says no, for now, to fans who want a web-only option

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