9 ms·

Sorry Cheapskates, But HBO Doesn’t Want Your Money

17 points by dwynings 14y ago

mcantor 14y ago
It has nothing to do with being a cheapskate, and everything to do with wanting to access content that I paid for on my own terms.
- bradleyland 14y ago
  Here's the rub. You didn't buy the content, you bought their terms.
bluedanieru 14y ago
Fair enough. They won't have it, then.
chrisdinn 14y ago
HBO should never have released a consumer-facing streaming service. They should've simply allowed viewers to access HBO programs through their service provider's streaming service. These apps just highlight how unnecessary the service provider is for the delivery of HBO content. Sure, the numbers might not make sense for HBO but they're still going to have to spend the next ten years explaining to customers why they need to pay $100/month, subscribing to a full suite of TV channels, just to watch Game of Thrones on their iPad. Meanwhile, AMC is making TV that's just as good with a business model that embraces cort-cutters. As streaming becomes more mainstream, HBO is going to have to keep explaining why you can watch Mad Men in iTunes the day after it airs but you have to wait almost a year to stream an episode of Game of Thrones (legally). And their reasons aren't going to satisfy anyone except execs at Time Warner and the service providers. Streaming isn't going away. How long can a content brand stand against its viewers in the age of rampant piracy? I have a feeling we're about to find out.
- waterlesscloud 14y ago
  I do wonder if HBO isn't saying one thing to please their cable provider customers and doing quite another to forward their own goals.
- Anechoic 14y ago
  Meanwhile, AMC is making TV that's just as good with a business model that embraces cort-cutters. And is currently at war with DishTV. It's a matter if the cord cutters can replace the revenue lost from traditional markets if the cable/satellite provides go nuclear.
- bradleyland 14y ago
  I have yet to hear a statement from HBO that even suggests the line of reasoning I'm about to lay out, but I think HBO is doing a great job of maximizing their current business model, while preparing for a coup of epic proportions. HBO is building a robust streaming media platform. Everything about the system would work as a standalone service, save one component: authentication and authorization. Stop and look at the moving parts for a moment. HBO isn't letting cable providers deliver HBO content through cableco apps. HBO has their own dedicated service and applications. When I want to view HBO content, the experience is HBO from beginning to end; save the login page to my content provider. The cable company's role feels a lot like an OAuth provider. HBO is in the content business, and they know it. I wish I could find it, but I recently read an interview with an HBO executive where he very eloquently expressed the current HBO business model. Essentially, cable companies serve as channel sales agents for HBO content. HBO knows that consumers want their content, but opening a direct channel risks their current (and very profitable) channel. Now take another step back. If the cable companies are merely a sales channel for HBO, what does that say about HBO's long term positioning. Keep in mind that HBO is doing a great job keeping the cable providers in that role, even from a technology standpoint. I think that HBO is putting themselves in a position to jump from one sales channel to another as soon as those channels are capable of supporting their business, or at least capable of mitigating the significant risk posed by alienating the channel that currently delivers 89% of their operating revenue. EDIT: Here is the article I was recalling: http://dcurt.is/hbo-forbes-journalism http://dcurt.is/hbo-forbes-journalism. And a relevant excerpt. > What you don't want to do is to pursue a distribution channel over here [ed: the internet], where you think, well, let's go around the affiliate and we'll get a couple hundred thousand subs. But the promotional, and packaging support we get over here [ed: the affiliate networks], which, by the way, is the foundation of our 30 million subs and enables us to get 10 million transactions, if that dissipates, and that shrinks, then we will lose a lot of subs over here. Because with 10 million transactions, you have to generate a lot of subs every single day. You can't afford to have that machinery slow down. So we'll gain a little over here, and we'll lose a lot over here, and we think there will not be a net gain, there would be a net loss. So it's really about economics and a business issue. Meanwhile, HBO puts themselves in a position to leap when the economics are right. Very savvy, IMO.
  - 14y ago
mistercow 14y ago
Then maybe they should stop whining about piracy.
Bud 14y ago
This guy's argument is rather unconvincing. For instance: Even if HBO wanted to offer direct-to-consumer subscriptions, there isn’t currently a payments and TV distribution service to build on top of, that’s popular and easy enough, with the right economics for content owners. Roku? Boxee? iOS + AirPlay? Samsung Smart TV? Xbox? Please. Compared to cable, these platforms are less popular, often harder to use, more fragmented, and have complicated or unfavorable billing systems. Maybe this will change as Apple, Microsoft, and Google go deeper into the living room. But right now, cable is still the safest bet. Actually, iOS is popular enough, easy to use, has a very simple billing system in place, and is MUCH easier to use than cable. Cable may be the "safest" bet, for the meek and unimaginative, but it's no longer the best.
- bradleyland 14y ago
  This is a classical problem for entrenched businesses. When you become the incumbent, you bear the incumbent's burden of risk. Any major shift you make risks the substantial business you've built. This is why most large businesses don't shift, but are replaced. Dan's argument isn't that this is the "best" decision in a general sense, but attempts to point out the rationale behind HBO's firm stance against uncoupling HBO subscriptions from cable subscriptions. There is one statement in this article that really explains the whole thing. At least to me: > And its $1.2 billion in Q1 operating income represented 89% of Time Warner’s total. [record scratch] In order for HBO to walk away from what works, one would have to present a very, very compelling model for what will work in the future. I don't see anyone doing that.
- jack-r-abbit 14y ago
  I'm not sure I would agree that iOS is MUCH easier than cable. I have a 50" TV connected to a cable box accessible with a remote... that is pretty easy AND a pretty good viewing experience (even with some of the crappy UI in the cable box). I'm not sure what set up I would need to have in order have a comparable viewing experience using our iPad but I have a hard time believing that it would be MUCH easier (or even easier at all). To me that sounds harder and less likely to be as enjoyable. But I suppose it would probably be cheaper. So I guess different strokes for different folks.
lr 14y ago
This is the perfect illustration of how consumers are at the very tail end of the market. So many decisions have been made before consumers "vote with their dollars/feet" that they usually have little "choice." I put choice in quotes because big companies hate consumer choice and it is why they will always prefer to do business with a sigle entity that makes decisions on behalf of the consumer. For instance, the monopoly beverage contracts that every restaurant has with Coke or Pepsi. As a consumer, you don't really have a choice in what to drink at a (fast food) restaurant, as that decision has already been made for you.
- jlarocco 14y ago
  > For instance, the monopoly beverage contracts that every restaurant has with Coke or Pepsi. As a consumer, you don't really have a choice in what to drink at a (fast food) restaurant, as that decision has already been made for you. Most people don't care enough, but if it's that big of a deal for you, go to a different restaurant. There's your choice. If watching HBO is more important than having an internet only option, then pay for HBO. Otherwise ditch HBO and go internet only through Netflix or something. Having choice doesn't mean you get to decide what all the options are.
  - bluedanieru 14y ago
    I think you're just being deliberately obtuse here, but anyway here goes: the OP is pointing out the restriction of choice, not what the choices are. You won't find a restaurant that serves both Coke and Pepsi. Whether you can go to another restaurant or whatever is completely beside the point.
nsxwolf 14y ago
I'm not cheap. I'd gladly pay way too much for an HBO show if I thought it was good enough. I just really, really hate broadcast media (channel numbers, time slots) and the band-aids that try to make it tolerable (DVRs). There is no show that is so good that I will ever subscribe to cable or satellite for. I will not bring those hideous boxes into my home.
- leak 14y ago
  I probably misunderstood what you said but, you want HBO to spend millions producing a show and then let you decide what to pay depending on your thoughts of the show?
  - nsxwolf 14y ago
    Oh, no. I just want to buy it on iTunes or similar. I'm saying I'd likely pay whatever they asked.
- k-mcgrady 14y ago
  The problem is there aren't many people like you. If they released it at a price they could afford to (say $4.99 per episode, available immediately after air) very few people would buy it and the majority would be pissed that HBO was charging so much. Although you may be happy to pay for it, it could damage their reputation.
brennannovak 14y ago
Viva La File Sharing!
joejohnson 14y ago
Internet subscriptions will happen, but I agree that HBO probably won't allow it anytime soon. In the meantime, cord-cutters are forced to pirate shows (or they can wait for certain shows in certain geographic regions). Eventually, HBO will realize they are trying to compete with free (via pirating) and will accept that $12/month, or something similar, might be an acceptable price. Currently, HBO can expect to make billions, but as the cable companies lose their stranglehold on the distribution channels, the price will inevitably drop.
runT1ME 14y ago
I think HBO is blowing smoke up the cable companies ass, and they are carefully calculating when to 'cut the cord' so to speak. HBOGO is just too slick of an application to have been an afterthought freebie for it's current customers. We're talking a very well designed and implemented web app, iPad app, and server side component. Does HBO really think that will entice new subscribers, or keep unhappy subscribers from canceling? I highly doubt it. I wouldn't be surprised if HBO is counting each and every hit and contemplating just how much money they'll make when that day comes.
Symmetry 14y ago
Time Warner CEO Jeff Bewkes has long been one of the biggest voices behind “TV Everywhere”...Bewkes would be going against everything he’s talked up for years Doesn't this boil down to, "The CEO would be willing to see his business fail rather than admit a mistake"?

17 points by dwynings 14y ago

It has nothing to do with being a cheapskate, and everything to do with wanting to access content that I paid for on my own terms.

bradleyland 14y ago
Here's the rub. You didn't buy the content, you bought their terms.

bluedanieru 14y ago

Fair enough. They won't have it, then.

chrisdinn 14y ago

HBO should never have released a consumer-facing streaming service. They should've simply allowed viewers to access HBO programs through their service provider's streaming service. These apps just highlight how unnecessary the service provider is for the delivery of HBO content. Sure, the numbers might not make sense for HBO but they're still going to have to spend the next ten years explaining to customers why they need to pay $100/month, subscribing to a full suite of TV channels, just to watch Game of Thrones on their iPad. Meanwhile, AMC is making TV that's just as good with a business model that embraces cort-cutters. As streaming becomes more mainstream, HBO is going to have to keep explaining why you can watch Mad Men in iTunes the day after it airs but you have to wait almost a year to stream an episode of Game of Thrones (legally). And their reasons aren't going to satisfy anyone except execs at Time Warner and the service providers. Streaming isn't going away. How long can a content brand stand against its viewers in the age of rampant piracy? I have a feeling we're about to find out.

waterlesscloud 14y ago
I do wonder if HBO isn't saying one thing to please their cable provider customers and doing quite another to forward their own goals.
Anechoic 14y ago
Meanwhile, AMC is making TV that's just as good with a business model that embraces cort-cutters. And is currently at war with DishTV. It's a matter if the cord cutters can replace the revenue lost from traditional markets if the cable/satellite provides go nuclear.
bradleyland 14y ago
I have yet to hear a statement from HBO that even suggests the line of reasoning I'm about to lay out, but I think HBO is doing a great job of maximizing their current business model, while preparing for a coup of epic proportions. HBO is building a robust streaming media platform. Everything about the system would work as a standalone service, save one component: authentication and authorization. Stop and look at the moving parts for a moment. HBO isn't letting cable providers deliver HBO content through cableco apps. HBO has their own dedicated service and applications. When I want to view HBO content, the experience is HBO from beginning to end; save the login page to my content provider. The cable company's role feels a lot like an OAuth provider. HBO is in the content business, and they know it. I wish I could find it, but I recently read an interview with an HBO executive where he very eloquently expressed the current HBO business model. Essentially, cable companies serve as channel sales agents for HBO content. HBO knows that consumers want their content, but opening a direct channel risks their current (and very profitable) channel. Now take another step back. If the cable companies are merely a sales channel for HBO, what does that say about HBO's long term positioning. Keep in mind that HBO is doing a great job keeping the cable providers in that role, even from a technology standpoint. I think that HBO is putting themselves in a position to jump from one sales channel to another as soon as those channels are capable of supporting their business, or at least capable of mitigating the significant risk posed by alienating the channel that currently delivers 89% of their operating revenue. EDIT: Here is the article I was recalling: http://dcurt.is/hbo-forbes-journalism http://dcurt.is/hbo-forbes-journalism. And a relevant excerpt. > What you don't want to do is to pursue a distribution channel over here [ed: the internet], where you think, well, let's go around the affiliate and we'll get a couple hundred thousand subs. But the promotional, and packaging support we get over here [ed: the affiliate networks], which, by the way, is the foundation of our 30 million subs and enables us to get 10 million transactions, if that dissipates, and that shrinks, then we will lose a lot of subs over here. Because with 10 million transactions, you have to generate a lot of subs every single day. You can't afford to have that machinery slow down. So we'll gain a little over here, and we'll lose a lot over here, and we think there will not be a net gain, there would be a net loss. So it's really about economics and a business issue. Meanwhile, HBO puts themselves in a position to leap when the economics are right. Very savvy, IMO.
- 14y ago

mistercow 14y ago

Then maybe they should stop whining about piracy.

Bud 14y ago

This guy's argument is rather unconvincing. For instance: Even if HBO wanted to offer direct-to-consumer subscriptions, there isn’t currently a payments and TV distribution service to build on top of, that’s popular and easy enough, with the right economics for content owners. Roku? Boxee? iOS + AirPlay? Samsung Smart TV? Xbox? Please. Compared to cable, these platforms are less popular, often harder to use, more fragmented, and have complicated or unfavorable billing systems. Maybe this will change as Apple, Microsoft, and Google go deeper into the living room. But right now, cable is still the safest bet. Actually, iOS is popular enough, easy to use, has a very simple billing system in place, and is MUCH easier to use than cable. Cable may be the "safest" bet, for the meek and unimaginative, but it's no longer the best.

bradleyland 14y ago
This is a classical problem for entrenched businesses. When you become the incumbent, you bear the incumbent's burden of risk. Any major shift you make risks the substantial business you've built. This is why most large businesses don't shift, but are replaced. Dan's argument isn't that this is the "best" decision in a general sense, but attempts to point out the rationale behind HBO's firm stance against uncoupling HBO subscriptions from cable subscriptions. There is one statement in this article that really explains the whole thing. At least to me: > And its $1.2 billion in Q1 operating income represented 89% of Time Warner’s total. [record scratch] In order for HBO to walk away from what works, one would have to present a very, very compelling model for what will work in the future. I don't see anyone doing that.
jack-r-abbit 14y ago
I'm not sure I would agree that iOS is MUCH easier than cable. I have a 50" TV connected to a cable box accessible with a remote... that is pretty easy AND a pretty good viewing experience (even with some of the crappy UI in the cable box). I'm not sure what set up I would need to have in order have a comparable viewing experience using our iPad but I have a hard time believing that it would be MUCH easier (or even easier at all). To me that sounds harder and less likely to be as enjoyable. But I suppose it would probably be cheaper. So I guess different strokes for different folks.

lr 14y ago

This is the perfect illustration of how consumers are at the very tail end of the market. So many decisions have been made before consumers "vote with their dollars/feet" that they usually have little "choice." I put choice in quotes because big companies hate consumer choice and it is why they will always prefer to do business with a sigle entity that makes decisions on behalf of the consumer. For instance, the monopoly beverage contracts that every restaurant has with Coke or Pepsi. As a consumer, you don't really have a choice in what to drink at a (fast food) restaurant, as that decision has already been made for you.

jlarocco 14y ago
> For instance, the monopoly beverage contracts that every restaurant has with Coke or Pepsi. As a consumer, you don't really have a choice in what to drink at a (fast food) restaurant, as that decision has already been made for you. Most people don't care enough, but if it's that big of a deal for you, go to a different restaurant. There's your choice. If watching HBO is more important than having an internet only option, then pay for HBO. Otherwise ditch HBO and go internet only through Netflix or something. Having choice doesn't mean you get to decide what all the options are.
- bluedanieru 14y ago
  I think you're just being deliberately obtuse here, but anyway here goes: the OP is pointing out the restriction of choice, not what the choices are. You won't find a restaurant that serves both Coke and Pepsi. Whether you can go to another restaurant or whatever is completely beside the point.

nsxwolf 14y ago

I'm not cheap. I'd gladly pay way too much for an HBO show if I thought it was good enough. I just really, really hate broadcast media (channel numbers, time slots) and the band-aids that try to make it tolerable (DVRs). There is no show that is so good that I will ever subscribe to cable or satellite for. I will not bring those hideous boxes into my home.

leak 14y ago
I probably misunderstood what you said but, you want HBO to spend millions producing a show and then let you decide what to pay depending on your thoughts of the show?
- nsxwolf 14y ago
  Oh, no. I just want to buy it on iTunes or similar. I'm saying I'd likely pay whatever they asked.
k-mcgrady 14y ago
The problem is there aren't many people like you. If they released it at a price they could afford to (say $4.99 per episode, available immediately after air) very few people would buy it and the majority would be pissed that HBO was charging so much. Although you may be happy to pay for it, it could damage their reputation.

brennannovak 14y ago

Viva La File Sharing!

joejohnson 14y ago

Internet subscriptions will happen, but I agree that HBO probably won't allow it anytime soon. In the meantime, cord-cutters are forced to pirate shows (or they can wait for certain shows in certain geographic regions). Eventually, HBO will realize they are trying to compete with free (via pirating) and will accept that $12/month, or something similar, might be an acceptable price. Currently, HBO can expect to make billions, but as the cable companies lose their stranglehold on the distribution channels, the price will inevitably drop.

runT1ME 14y ago

I think HBO is blowing smoke up the cable companies ass, and they are carefully calculating when to 'cut the cord' so to speak. HBOGO is just too slick of an application to have been an afterthought freebie for it's current customers. We're talking a very well designed and implemented web app, iPad app, and server side component. Does HBO really think that will entice new subscribers, or keep unhappy subscribers from canceling? I highly doubt it. I wouldn't be surprised if HBO is counting each and every hit and contemplating just how much money they'll make when that day comes.

Symmetry 14y ago

Time Warner CEO Jeff Bewkes has long been one of the biggest voices behind “TV Everywhere”...Bewkes would be going against everything he’s talked up for years Doesn't this boil down to, "The CEO would be willing to see his business fail rather than admit a mistake"?