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Cable Technology Feature Article

March 25, 2013

HBO Considers Offering HBO GO A La Carte

By Tara Seals, TMCnet Contributor

HBO is mulling the idea of taking its HBO GO service beyond its TV Everywhere roots by cutting the cord to pay-TV operators and instead setting it up as a streaming on-demand service to rival over-the-top (OTT) leaders like Netflix.

HBO Chief Executive Richard Plepler told Reuters that the premium network was considering allowing consumers who do not subscribe to HBO via cable, satellite or IPTV (News - Alert) providers to pay a monthly fee for access to the mobile and Web-based app.

"Maybe HBO GO, with our broadband partners, could evolve,” Plepler said during a roll-up event for the Season 3 premiere of HBO's popular drama, “Game of Thrones."

The idea is to offer it a la carte, or, to package HBO GO with a broadband tier from an ISP—which typically happens to be those same cable and IPTV providers. Pepler postulated that consumers could pay $50 a month for broadband Internet and an extra $10 or $15 for HBO. At present, HBO costs about that per month when added on to a pay-TV service.

"We would have to make the math work," he said.

The HBO GO on-demand service is available throughout the U.S., Brazil and in several European countries, with a traditional TV Everywhere model that allows existing HBO subscribers to authenticate to the service using their cable or satellite credentials in order to view the totality of the HBO catalog on smartphones, tablets or the Web. It has about 6.5 million registered users, which means that there is plenty of room to expand the customer base. In contrast, about 100 million subscribe to HBO via TV providers, globally.

Looking to increase its base, HBO has already dabbled in offering HBO GO a la carte, in the Scandinavian countries. Late last year it launched the service under the HBO Nordic brand in Finland, Norway, Sweden, and Denmark, with a standalone model.

That announcement was made hot on the heels of Netflix making plans to enter the same four Scandinavian countries—setting up a bit of a battle royale in that region. Netflix CEO Reed Hastings has characterized HBO GO as his company's biggest competition. The area is a perfect greenfield market within which to experiment, given that it offers 25 million people but only one other OTT competitor: Amazon's LoveFiLM service.

"The Nordic pay-TV market has a tremendous growth potential for new innovative services which respond to the existing shifts in consumer viewing habits on multiple screens,” said Peter Ekelund, owner of Parsifal International, HBO’s partner on the launch.

No word on when additional service details may emerge as to HBO’s plans to expand the OTT model, or the timing of it, but one can assume major market rippled should the Time Warner (News - Alert)-owned company decide to go in that direction. HBO has a raft of high-value original content that continues to be a differentiating aspect for a pay-TV service and one more firewall against cord-cutting on the part of consumers. It has relied for decades on the market reach and marketing engines within cable, satellite and IPTV providers to get it in front of consumers and grow its subscription base. But in an all-IP world of smart mobile devices, the OTT model offers the ability to expand its reach, capturing the opportunity to serve cord-cutting or low-intake TV users who are uninterested in paying $100+ per month for a TV subscription, as well as garner a similar ARPU without having to share the takings with a distributor.

The broadband package alternative would go a long way to soothing its TV partners’ feathers, and, an HBO add-on for broadband could be a differentiator for broadband service, which has been a consistent bright spot for telcos and cable MSOs alike in recent quarters as penetration ramps up.

Edited by Rachel Ramsey

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