HBO Might Go Over-the-Top (in Additional Markets Overseas)

/ Aug 4, 2014

hbo go

HBO Go as a standalone app in the US? Not likely anytime soon. But if you happen to live in a few international markets, including Japan and Turkey, that’s a distinct possibility.

Per The Wall Street Journal, HBO is considering opening up its HBO Go app as an over-the-top video service in markets that “have good broadband infrastructure and where HBO doesn’t generate a lot of revenue from licensing its programming.” It would be an expansion of what HBO has already been doing in Nordic countries, which since 2012 have offered access to HBO Go for a monthly fee without requiring an accompanying pay-TV subscription.

There is no timetable for a launch in any specific market, WSJ notes. But the report reaffirms what HBO has said when asked if HBO Go would ever be untethered from the network’s pay-TV business in the US: only if the economics make sense.

In the US, HBO gets about half of the $16 subscribers pay to cable companies to access its network of channels. The pay-TV operators also handle billing and customer service, and provide plenty of marketing without HBO having to spend a dime. So as the business stands right now, for HBO to unlike HBO Go and offer it for price comparable to Netflix ($8.99), the company would lose out on a significant chunk of revenue.

That’s not the case in many international markets. HBO has channels in about 60 countries, and licenses its programming out to distributors in many others. By going direct-to-consumer in those markets, HBO can not only control the distribution of its content, but build an audience in regions that have the most potential for growth.

According to data from research firm SNL Kagan, via WSJ, HBO and sister network Cinemax combined have 29.3 million subscribers in the US — adding only 400,000 net subscribers between 2007 and 2013. Comparatively, internationally HBO and Cinemax already have 85 million subscribers, adding 10 million in 2013 alone. And, again, that’s only in the markets that HBO is already distributing its channels to. That changes if the company decides to open up HBO Go in markets where it’s only licensing programming.

There’s another wrinkle to this: Per WSJ, HBO’s “threat to go over-the-top” has led pay-TV companies to increase the prices they are paying to carry the channel. Or in other words: it’s another way to increase returns from an already lucrative market.

So HBO Go as a standalone service may happen. But it’s going to happen on HBO’s terms, and when economically it makes the most sense. If you live in the US, don’t hold your breath — though you can always just borrow someone else’s HBO Go password.

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