4 ms·

This is a textbook case of innovator's dilemma, I think. "... and there’s no way that HBO could make up in online volume the number of subscribers it would los

by Jun8 14y ago

This is a textbook case of innovator's dilemma, I think. "... and there’s no way that HBO could make up in online volume the number of subscribers it would lose from cable" This assumes two things: 1. That all cable companies immediately will cut HBO from their lineups as soon as it offers web only deals. This is insane! What else will keep up the $100+ cable offerings? They have nothing else other than sports. 2. Where does this "no way" argument come from. HBO's cut from each cable subscriber is, I think ~$10. If it offers, say, a $40 all you can eat online option, how much of that revenue will go down to infrastructure, etc? With Netflix and Amazon rising on one side and more and more of the younger demographic watching web-streamed shows, HBO will change, the questions is: will it take five years or two?

jaems33 14y ago
What web-streamed shows come even close to the quality of HBO produced shows? I'm not trying to be argumentative, I'm curious. Yahoo produces a lot of their own 'shows' but it all seems amateurishly directed that I can't bother to watch a second of it. Edit: I think funnyordie videos are actually really well produced.
- objclxt 14y ago
  It's difficult, because low-budget web shows often have quite a short turnaround, whereas a high budget show can take several years to get off the ground (at least a year in development, and a year to write, shoot, and edit). For example, Netflix are shooting for (comparatively) high-budget original content with several shows due to drop in 2013 (like Arrested Development) - there's also been a move towards joint production deals where the shows are produced for streaming on a service like Netflix in the US but then sold for TV broadcast in other countries.
- natural219 14y ago
  Dr. Horrible's Sing-Along Blog comes to mind. It won an Emmy in 2009.
  - mmuro 14y ago
    Quality, yes. Cost, hell no. Dr. Horrible cost over $200k. Game of Thrones costs upwards of $60 million per season.
    - danudey 14y ago
      I'm willing to bet that if every person who watched the Game of Thrones Season 2 premiere (6.3m, http://www.wetpaint.com/network/articles/63-million-people-watched-the-game-of-thrones-season-2-premiere http://www.wetpaint.com/network/articles/63-million-people-w...) paid $10, that would pay for the entire season. I'm also willing to bet that there's no way you could get enough people to do that.
      - mmuro 14y ago
        Why aren't you already assuming that the majority of those viewers are paying for it?
- deleted 14y ago
  [deleted]
- jinushaun 14y ago
  I watch full episodes of How I Met Your Mother for free on cbs.com. No need for Pirate Bay. Unless, of course, you're talking about web-exclusive shows.
  - jaems33 14y ago
    Web exclusive shows.
- gdubs 14y ago
  People may downvote this but I'll say it anyway: PBS has done a pretty damn good job with Downton Abbey, especially in providing a really simple and well functioning streaming player.
roc 14y ago
My guess is that the timing is entirely contingent on their existing contracts. My guess is that HBO's contracts with cable providers have terms that are simply incompatible with a direct-to-consumer offering. If they were renegotiated at any point in the last five or so years, I would think it likely that such clauses exist. Perhaps not with every provider, but with enough to make things problematic prior to the next round of re-negotiations. e.g. Suppose something in the contract indicates that Comcast only kicks back to HBO a fraction of the cheapest available consumer-facing price. (Protecting Comcast from HBO's turning around and cutting a sweetheart deal with another cable operator the next day) In which case HBO's $10 cut of the $17ish that Comcast charges [1] would itself erode should HBO make a hypothetical $12/mo offering available. So even if HBO's cable subscriber numbers held steady, they may well be facing a huge drop in revenue simply by making an economically-feasible direct-to-consumer offering. [2] Or, it could be a more direct clause simply prevents any direct-to-consumer offering. But that situation sounds the most likely to me. It would have been in the cable operators interests to ask for such clauses and in HBO's interests to concede. [3] [1] Numbers based solely on prior articles I've read. I haven't had cable, let alone HBO, in quite some time. [2] I think we can all agree that even HBO would be dead-in-the-water among cord-cutters at anything north of $15/mo. And anything between 10 and 15 gets debatable. [3] Even three years ago streaming was not 'ready' to the point of justifying a fight with cable operators. Even now it's anything but a sure thing. Particularly when there hasn't been a real break-out leader in the IP-set-top-box space. They'd need to sign and support a half-dozen deals and platforms to give this thing an honest shot at the moment. Going slow with HBO Go is a very shrewd way to ease into the platform fight before a crush of public interest descends on a hypothetical consumer-direct offering.
- joelhaus 14y ago
  Two more risks: net neutrality and data caps. If cable companies were to ever concede a direct-to-consumer offering from HBO, you can bet that HBO gets a smaller share of the cable subscriber revenue. Without legislation protecting competition, the cable companies can easily stifle online competition with data caps and violations of net neutrality principles... this is likely because it is in their economic interest (albeit, in a subtle fashion) to do so. My guess is that HBO understands how much this would hurt their bottom-line just as well as SONY does[1]. Lesson: lack of broadband competition harms the consumer and stifles innovation. [1] http://www.theverge.com/2012/5/2/2993265/sony-iptv-plans-comcast-bandwidth-cap http://www.theverge.com/2012/5/2/2993265/sony-iptv-plans-com...

by Jun8 14y ago

jaems33 14y ago

What web-streamed shows come even close to the quality of HBO produced shows? I'm not trying to be argumentative, I'm curious. Yahoo produces a lot of their own 'shows' but it all seems amateurishly directed that I can't bother to watch a second of it. Edit: I think funnyordie videos are actually really well produced.

objclxt 14y ago
It's difficult, because low-budget web shows often have quite a short turnaround, whereas a high budget show can take several years to get off the ground (at least a year in development, and a year to write, shoot, and edit). For example, Netflix are shooting for (comparatively) high-budget original content with several shows due to drop in 2013 (like Arrested Development) - there's also been a move towards joint production deals where the shows are produced for streaming on a service like Netflix in the US but then sold for TV broadcast in other countries.
natural219 14y ago
Dr. Horrible's Sing-Along Blog comes to mind. It won an Emmy in 2009.
- mmuro 14y ago
  Quality, yes. Cost, hell no. Dr. Horrible cost over $200k. Game of Thrones costs upwards of $60 million per season.
  - danudey 14y ago
    I'm willing to bet that if every person who watched the Game of Thrones Season 2 premiere (6.3m, http://www.wetpaint.com/network/articles/63-million-people-watched-the-game-of-thrones-season-2-premiere http://www.wetpaint.com/network/articles/63-million-people-w...) paid $10, that would pay for the entire season. I'm also willing to bet that there's no way you could get enough people to do that.
    - mmuro 14y ago
      Why aren't you already assuming that the majority of those viewers are paying for it?
deleted 14y ago
[deleted]
jinushaun 14y ago
I watch full episodes of How I Met Your Mother for free on cbs.com. No need for Pirate Bay. Unless, of course, you're talking about web-exclusive shows.
- jaems33 14y ago
  Web exclusive shows.
gdubs 14y ago
People may downvote this but I'll say it anyway: PBS has done a pretty damn good job with Downton Abbey, especially in providing a really simple and well functioning streaming player.

roc 14y ago

My guess is that the timing is entirely contingent on their existing contracts. My guess is that HBO's contracts with cable providers have terms that are simply incompatible with a direct-to-consumer offering. If they were renegotiated at any point in the last five or so years, I would think it likely that such clauses exist. Perhaps not with every provider, but with enough to make things problematic prior to the next round of re-negotiations. e.g. Suppose something in the contract indicates that Comcast only kicks back to HBO a fraction of the cheapest available consumer-facing price. (Protecting Comcast from HBO's turning around and cutting a sweetheart deal with another cable operator the next day) In which case HBO's $10 cut of the $17ish that Comcast charges [1] would itself erode should HBO make a hypothetical $12/mo offering available. So even if HBO's cable subscriber numbers held steady, they may well be facing a huge drop in revenue simply by making an economically-feasible direct-to-consumer offering. [2] Or, it could be a more direct clause simply prevents any direct-to-consumer offering. But that situation sounds the most likely to me. It would have been in the cable operators interests to ask for such clauses and in HBO's interests to concede. [3] [1] Numbers based solely on prior articles I've read. I haven't had cable, let alone HBO, in quite some time. [2] I think we can all agree that even HBO would be dead-in-the-water among cord-cutters at anything north of $15/mo. And anything between 10 and 15 gets debatable. [3] Even three years ago streaming was not 'ready' to the point of justifying a fight with cable operators. Even now it's anything but a sure thing. Particularly when there hasn't been a real break-out leader in the IP-set-top-box space. They'd need to sign and support a half-dozen deals and platforms to give this thing an honest shot at the moment. Going slow with HBO Go is a very shrewd way to ease into the platform fight before a crush of public interest descends on a hypothetical consumer-direct offering.

joelhaus 14y ago
Two more risks: net neutrality and data caps. If cable companies were to ever concede a direct-to-consumer offering from HBO, you can bet that HBO gets a smaller share of the cable subscriber revenue. Without legislation protecting competition, the cable companies can easily stifle online competition with data caps and violations of net neutrality principles... this is likely because it is in their economic interest (albeit, in a subtle fashion) to do so. My guess is that HBO understands how much this would hurt their bottom-line just as well as SONY does[1]. Lesson: lack of broadband competition harms the consumer and stifles innovation. [1] http://www.theverge.com/2012/5/2/2993265/sony-iptv-plans-comcast-bandwidth-cap http://www.theverge.com/2012/5/2/2993265/sony-iptv-plans-com...