Down With Cable! Why HBO Is Finally Launching a Standalone Streaming Service


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HBO



Rejoice, cord cutters. HBO has announced it will launch its own online video streaming service next year, no cable TV subscription needed.


Until now, HBO’s streaming service, HBO GO, has required users to have an HBO subscription, but in an investor meeting on Wednesday, HBO chairman and CEO Richard Plepler acknowledged that this model excludes the some 10 million homes in the U.S. that are now broadband only. And that number is only expected to grow. “That is a large and growing opportunity that should no longer be left untapped,” Plepler said. “It is time to remove all barriers to those who want HBO.”


For those who have been watching the cord cutter revolution, HBO’s move is a long time coming. The HBO GO subscription model has always felt like a half-baked attempt at the over-the-top TV market. Plus, a poorly kept secret about HBO GO has always been that you don’t really need a subscription to watch unlimited HBO content online. You just need to know someone—or know someone who knows someone—with a subscription and is willing to share his password. That means that a whole lot of us are basically getting full access to HBO without paying a penny. With a standalone service, in other words, HBO will finally be able to collect on all that binge Game of Thrones watching you’ve been doing on your cousin’s boyfriend’s roommate’s account.


What’s most unusual about this change in events, though, is the fact that many consumers are actually ready and willing the pay HBO for this kind of thing. Two years ago, a site called TakeMyMoneyHbo.com launched, and asked people how much they’d pay for a standalone service. The site got more than 163,000 visitors in the first 48 hours and found that the average person would pay around $12 a month.


Consumers wanted this service because, with so many options for watching traditional television online—from Netflix to Hulu to Amazon Prime Instant Video—access to HBO has been one of the last remaining reasons to stick with cable. Better to pony up the $12 a month than fork over $120 or more for cable.


So, why then, did HBO take so long to break away from cable? The answer may be that HBO was under tremendous pressure from cable companies, who are finding themselves struggling to compete with the emergence of low-cost services like Netflix. Angering them could potentially jeopardize HBO’s relationship with the cable companies, who could then slap HBO with higher fees for carrying their content.


But in recent years, the power seems to have shifted. As HBO has become more and more beloved and cable companies have become more and more reviled, the odds of HBO winning a fight against a massive cable company are much higher. Many people still subscribe to cable to get HBO, meaning if say, Comcast, were to hit HBO with higher fees or terminate its service, Comcast might very well lose customers, too.


Meanwhile, another new cultural trend may also be adding to the pressure HBO is feeling to launch such a service. It’s not cord cutting, per se, but “cord shaving,” a phenomenon recently explored by The Wall Street Journal , in which consumers are keeping cable, but cutting add-on channels like ESPN or the Food Network. As more HBO quality content emerges from companies like Netflix and Amazon, it’s possible that this cord-shaving trend could hit HBO particularly hard if it doesn’t act fast.


HBO already tiptoed toward the unbundled future earlier this year, announcing a deal that would give Amazon Prime members unlimited access to some older HBO content. Now, it seems HBO is ready to fully take the plunge. Details on the new service’s name, how much it will cost, and what content will be available are still unclear, but one thing is sure: cable companies, should be very, very afraid.



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