5 ms·

To your last point, there was an article in the Economist last summer about HBO and the economics around it. Here's an excerpt as to why they don't decouple fr

by joeshaw 14y ago

To your last point, there was an article in the Economist last summer about HBO and the economics around it. Here's an excerpt as to why they don't decouple from cable TV: "In future HBO Go could allow the network to bypass the entire pay-TV system. For now, going “over the top” in this way makes no sense, says Bill Nelson, HBO’s chief executive. There are roughly 105m multichannel TV households in America, of which 77m do not subscribe to HBO. By contrast, he reckons, there are only about 3m households with broadband connections and reasonable amounts of money but no multichannel TV." From http://www.economist.com/node/21526314 http://www.economist.com/node/21526314.

waterlesscloud 14y ago
But who for one second thinks that cable providers would drop HBO if they started going around them? HBO has what cable companies need. The companies simply can't afford to cut them off. HBO should call their bluff, honestly.
- AncientPC 14y ago
  Current HBO subscribers = 28M Revenue per subscriber = $5 Households that can support HBO Go = 5M Revenue per subscriber = $15 Assume 100% of eligible households subscribe. (28M * -5 * x%) + (3M * 15 * 100%) = y x = 32.14% For y to be positive (net gain for HBO), the chance that cable companies drop HBO needs to be less than 32%. If we assume HBO Go adoption rates are the same as cable subscribers (26.6%), that means 800k subscribers. (28M * -5 * x%) + (800k * 15 * 100%) = y x = 8.57% For HBO to have a net gain, the chance that cable companies drop HBO needs to be less than 8.5%. Another way to put it, in order to risk $140M to gain $12M you need to be more than 91% sure.
  - sureshv 14y ago
    It's worse since HBO's subscriber fee is closer to $8 per user per month. It's the most expensive cable channel on a per user fee basis. ESPN is around $4 per user.
- wpietri 14y ago
  The cable companies need HBO less than HBO needs cable. Without cable distribution, HBO is dead. Cable without HBO is still cable, though; 75% of their subscribers don't get it, and I'm sure a pretty small percentage of the ones who do would drop cable altogether in response. It's usually unwise to start a fight you can't win.

by joeshaw 14y ago

waterlesscloud 14y ago

But who for one second thinks that cable providers would drop HBO if they started going around them? HBO has what cable companies need. The companies simply can't afford to cut them off. HBO should call their bluff, honestly.

AncientPC 14y ago
Current HBO subscribers = 28M Revenue per subscriber = $5 Households that can support HBO Go = 5M Revenue per subscriber = $15 Assume 100% of eligible households subscribe. (28M * -5 * x%) + (3M * 15 * 100%) = y x = 32.14% For y to be positive (net gain for HBO), the chance that cable companies drop HBO needs to be less than 32%. If we assume HBO Go adoption rates are the same as cable subscribers (26.6%), that means 800k subscribers. (28M * -5 * x%) + (800k * 15 * 100%) = y x = 8.57% For HBO to have a net gain, the chance that cable companies drop HBO needs to be less than 8.5%. Another way to put it, in order to risk $140M to gain $12M you need to be more than 91% sure.
- sureshv 14y ago
  It's worse since HBO's subscriber fee is closer to $8 per user per month. It's the most expensive cable channel on a per user fee basis. ESPN is around $4 per user.
wpietri 14y ago
The cable companies need HBO less than HBO needs cable. Without cable distribution, HBO is dead. Cable without HBO is still cable, though; 75% of their subscribers don't get it, and I'm sure a pretty small percentage of the ones who do would drop cable altogether in response. It's usually unwise to start a fight you can't win.