4 ms·

Your 4th paragraph needs to be your first. The issue here is that HBO still (thinks they) needs big cable, and aren't willing to piss off cable distributors to

Your 4th paragraph needs to be your first. The issue here is that HBO still (thinks they) needs big cable, and aren't willing to piss off cable distributors to offer a purely digital delivery. Why wouldn't they want to cut out the middle man financially? Current distribution systems like Hulu and Netflix already prove such a tactic is possible.

wpietri 15y ago
HBO made about $4 billion in 2011 from subscriber revenue. The company is circa 40 years old. If you are an executive at a company that size and age, one of your primary jobs is to not fuck anything up. Currently the upside to directly delivery is small; there just aren't that many people who have the hardware, bandwidth, and inclination to buy shows online. Certainly nothing like the 28 million subscribers they currently have. There is no serious incentive for them to be a pioneer in this. Amazon, Apple, and Netflix are doing a fine job of figuring out what a la carte TV show delivery will eventually mean. When the market is big enough to make it worth getting in a fight with the cable monopolies, I'm sure HBO will do it. But for now, they can let other people take the risk.
- ascendant 15y ago
  This. For all the hemming and hawing that is done about *AA's and digital delivery, it's got to make sense compared to their current budgets. Most astute people can see the ship leaving the harbor in terms of what the future looks like, but when your revenue is measured in billions, it's easier to just let things shake out and then see who wins than it is to put it on the line and potentially get burned betting the wrong way. edit: I don't necessarily believe in this as a sound way of doing business, but I understand why they'd think this way.
- rscale 15y ago
  And in the meantime, HBO Go gives them a great opportunity to learn how to build a great service, so that once it makes sense to fight with the cable companies, they already have a great, mature product.
- EthanHeilman 15y ago
  It's not an either/or proposition, HBO can allow streaming and still be friends with the cable companies. NBC is one of the big backers of Hulu and the cable companies still deal with NBC.
  - wpietri 15y ago
    Do the cable companies deal with NBC? I thought they only dealt with local broadcast affiliates. But I confess I haven't had cable in a long time. Regardless, premium content like HBO is different than broadcast television. The cable companies never had US exclusives to Saturday Night Live. But they do for Game of Thrones, and I doubt they'll give that up willingly. Remember: they're monopolists, and to a monopolist there's no such thing as fair competition.
  - fluidcruft 15y ago
    Comcast owns NBC now. Of course, they're probably required to keep playing ball with Hulu for a while to appease congress and the FCC.
- mindblink 15y ago
  Exactly, their business model is to drive Cable Channel subscription, which I gather is way more lucrative revenue stream than getting a slice of a bundled internet service like Netflix, or directly selling episodes at the going rate (already comparatively higher price) of iTunes. Even their DVD sales of Game of Thrones occur until 1 month right before the 2nd tv season begins. All the more to goose interest in the show and channel subscription....
- nknight 15y ago
  > Certainly nothing like the 28 million subscribers they currently have. Netflix alone had over 23 million streaming subscribers at the end of Q4. I'd say your instincts as to the market potential are quite underwhelming.
  - wpietri 15y ago
    Sure, and that's a distribution network they've spent 14 years building. And they have way, way, way more content than HBO does. And those people are all on an easy-peasy all-you-can-eat plan; they are not buying individual shows. And HBO subscribers currently pay an average of something like $12 per month versus $8 for all of Netflix. To me, that says that HBO would be idiots to fuck up their current cable relationships in hopes of building their own direct-distribution product. For now they can happily continue to sell the downloadable content to Amazon at the same time they release the DVDs.
ctdonath 15y ago
Kodak didn't want to tick off their retail distributors to offer serious digital image processing. Look where it got them. The problem for both is/was the jump from middleman-controlled to direct-to-customer involves a huge backlash in the process. The middleman will have to follow thru on the threat to drop distribution completely, at a time that direct customer contact is growing but still inadequate to make up that loss. Cutting out the middleman means a big hole that takes time to fill; it's killing the cash cow then waiting for the calf to mature.

wpietri 15y ago

HBO made about $4 billion in 2011 from subscriber revenue. The company is circa 40 years old. If you are an executive at a company that size and age, one of your primary jobs is to not fuck anything up. Currently the upside to directly delivery is small; there just aren't that many people who have the hardware, bandwidth, and inclination to buy shows online. Certainly nothing like the 28 million subscribers they currently have. There is no serious incentive for them to be a pioneer in this. Amazon, Apple, and Netflix are doing a fine job of figuring out what a la carte TV show delivery will eventually mean. When the market is big enough to make it worth getting in a fight with the cable monopolies, I'm sure HBO will do it. But for now, they can let other people take the risk.

ascendant 15y ago
This. For all the hemming and hawing that is done about *AA's and digital delivery, it's got to make sense compared to their current budgets. Most astute people can see the ship leaving the harbor in terms of what the future looks like, but when your revenue is measured in billions, it's easier to just let things shake out and then see who wins than it is to put it on the line and potentially get burned betting the wrong way. edit: I don't necessarily believe in this as a sound way of doing business, but I understand why they'd think this way.
rscale 15y ago
And in the meantime, HBO Go gives them a great opportunity to learn how to build a great service, so that once it makes sense to fight with the cable companies, they already have a great, mature product.
EthanHeilman 15y ago
It's not an either/or proposition, HBO can allow streaming and still be friends with the cable companies. NBC is one of the big backers of Hulu and the cable companies still deal with NBC.
- wpietri 15y ago
  Do the cable companies deal with NBC? I thought they only dealt with local broadcast affiliates. But I confess I haven't had cable in a long time. Regardless, premium content like HBO is different than broadcast television. The cable companies never had US exclusives to Saturday Night Live. But they do for Game of Thrones, and I doubt they'll give that up willingly. Remember: they're monopolists, and to a monopolist there's no such thing as fair competition.
- fluidcruft 15y ago
  Comcast owns NBC now. Of course, they're probably required to keep playing ball with Hulu for a while to appease congress and the FCC.
mindblink 15y ago
Exactly, their business model is to drive Cable Channel subscription, which I gather is way more lucrative revenue stream than getting a slice of a bundled internet service like Netflix, or directly selling episodes at the going rate (already comparatively higher price) of iTunes. Even their DVD sales of Game of Thrones occur until 1 month right before the 2nd tv season begins. All the more to goose interest in the show and channel subscription....
nknight 15y ago
> Certainly nothing like the 28 million subscribers they currently have. Netflix alone had over 23 million streaming subscribers at the end of Q4. I'd say your instincts as to the market potential are quite underwhelming.
- wpietri 15y ago
  Sure, and that's a distribution network they've spent 14 years building. And they have way, way, way more content than HBO does. And those people are all on an easy-peasy all-you-can-eat plan; they are not buying individual shows. And HBO subscribers currently pay an average of something like $12 per month versus $8 for all of Netflix. To me, that says that HBO would be idiots to fuck up their current cable relationships in hopes of building their own direct-distribution product. For now they can happily continue to sell the downloadable content to Amazon at the same time they release the DVDs.

ctdonath 15y ago

Kodak didn't want to tick off their retail distributors to offer serious digital image processing. Look where it got them. The problem for both is/was the jump from middleman-controlled to direct-to-customer involves a huge backlash in the process. The middleman will have to follow thru on the threat to drop distribution completely, at a time that direct customer contact is growing but still inadequate to make up that loss. Cutting out the middleman means a big hole that takes time to fill; it's killing the cash cow then waiting for the calf to mature.