By Sahil Patel
And here we go: HBO chairman and CEO Richard Plepler has confirmed that HBO will launch a “standalone, over-the-top” HBO service in the US in 2015.
The announcement was made early Wednesday during Time Warner’s “Investor Day” presentation. “All in, there are 80 million homes that do not have HBO and we will use all means at our disposal to go after them,” Plepler said. “That is a large and growing opportunity that should no longer be left untapped. It is time to remove all barriers to those who want HBO.”
Plepler said HBO will work with its current partners (cable and satellite TV companies) as well as “explore models” with new partners in order to bring HBO to the masses.
This is certainly a huge moment — for HBO, Time Warner, the pay-TV industry, and the burgeoning online video space. But before we get to that, a few caveats:
Plepler did not specify how this HBO online video service would look like. In order to keep its current TV partners happy, the untethered version of HBO could “window” content — offering programming a few days, weeks, or months after it airs on the TV network.
HBO also has an exclusive library deal with Amazon in the US for many of its classic shows. That means Amazon Prime Instant Video is the only SVOD player in the US with access to full seasons of “The Sopranos,” “Six Feet Under,” “The Wire,” and more. The deal also covers more recent fare like “Girls,” “The Newsroom,” and “Veep,” which will show up on Amazon Prime approximately three years after airing on the network. (Notably missing under this pact: “Game of Thrones,” which also happens to be one of the most pirated shows on the web.) It’s not clear how this would affect HBO’s online-only service, especially considering these shows are also available on HBO Go in the US.
And on top of all of that, building a strong over-the-top service isn’t cheap. Remember HBO Go’s troubles with the “True Detective” season one finale? HBO will need a strong tech, marketing, and yes billing infrastructure to make everything work seamlessly. To accomplish this, there’s speculation that HBO could partner with online companies like Amazon, or maybe even internet-service providers (if their TV counterparts aren’t too pissed off).
With that said, it’s clear this was where HBO was headed, maybe as far back as when it first decided to unhook HBO Go for the Nordic region. At the time, and many times since, the company said the economics simply didn’t work for HBO to offer a standalone service in the US.
HBO’s TV partners provide a lot of support in terms of marketing, billing, and distribution — so what changed?
Plepler mentioned how HBO’s current deals with companies like Comcast ensures that distributors keep all subscription revenue after meeting certain goals. “There are hundreds of millions of dollars that our partners aren’t sharing with us,” said Plepler during his presentation.
That said, this doesn’t necessarily mean the end of HBO’s current place within the TV ecosystem. Most of Plepler’s presentation actually focused on HBO’s plans to build its traditional business, which helped bring in $4.9 billion in revenue for the company last year.
Simply, HBO wants better terms, and going over-the-top and direct might be the way to accomplish that.
TV distributors might not be happy with HBO’s decision right now. But as many of them also offer broadband access, the premium network could work with them to reach the 10 million US homes that Plepler said are broadband-only. It would certainly keep HBO “in the family.”
It remains to be seen how cable and satellite companies respond to HBO’s announcement.
Maybe even more interesting: the response from Netflix, which hasn’t been shy about its desire to “become” a digital HBO.
But until then, yes, some version of HBO is coming online in 2015.
This article has been updated to include more coverage of HBO’s announcement.