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HBO Will Go OTT in 2015

Mari Silbey
10/15/2014
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"It's time to remove all barriers to those that want HBO."

With those words, Home Box Office Inc. (HBO) Chairman and CEO Richard Pleper this morning announced at a Time Warner Inc. (NYSE: TWX) investor meeting this morning that his company will introduce an over-the-top HBO service in the US next year. Initially, the new service will be delivered through pay-TV partners in an attempt to reach the millions of broadband-only subscribers. Pleper said HBO will work through its existing distributors (i.e. with cable and telco TV providers), but will also explore opportunities with new partners as well.

Pleper added that HBO will also launch its OTT service in some additional countries later next year. (See HBO Braces to Battle Netflix in Europe, Comcast Set to Bundle Broadband & HBO and Time Warner Shakes Up the Bundle.)

The introduction of a standalone product isn't the only way that HBO intends to boost its profits in the future. The company also plans to negotiate better terms with pay-TV distributors to reduce the number of non-revenue generating subscribers currently on the books. And, for the first time in 20 years, HBO plans to run a brand-specific marketing campaign in an effort to reach new audiences.


Want to know more about OTT services? Check out our dedicated OTT content channel here on Light Reading.


On the web, HBO will find itself going head to head with Netflix Inc. (Nasdaq: NFLX), but Pleper is highly optimistic about the network's potential. He noted that HBO had commissioned research showing that when people learn about everything that HBO has to offer, non-subscribers are interested in signing up.

Pleper offered no specific information on pricing or distribution for the new standalone HBO service, saying that for competitive reasons he couldn't reveal details yet. However, he was demonstrably confident that the new OTT offering would be compelling, saying "this will be transformative for our company."

— Mari Silbey, special to Light Reading

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cnwedit
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cnwedit,
User Rank: Light Beer
10/16/2014 | 11:25:39 AM
Re: This is the time to MONETIZE OTT
This entire thread is the perfect example of what's wrong with the current PayTV model. We all see it from our individual perspective but no one has a view of a better future.

At this point, my primary TV set has four different inputs and what we watch at night depends on those inputs -- payTV (cable), Roku device, game system and BluRay player. Oh, and each of the latter three has an Internet connection.

Yet when I wanted to watch the last three episodes of a show from last year, I wound up getting a one-week free membership to Hulu Plus just to view those (cancelled it immediately). 

And I'm seriously considering getting the NHL package to watch hockey on the road. 

The ability to personalize the TV experience was something a few startups tried several years back but they ran afoul of content licensing and I still think that remains the biggest hurdle. 

There's a reason a growing number of cable and telco operators view video as a lost cause and are emphasizing their broadband connections. 
mendyk
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mendyk,
User Rank: Light Sabre
10/16/2014 | 11:18:04 AM
Re: This is the time to MONETIZE OTT
There's a ton of creative destruction out there, but not much in the way of creative construction. Some people may really want to spend significant amounts of time and energy pursuing content. Others just want to turn the idiot box on and watch something/anything. Producers of video content should be mindful of what happened to the music business thanks to digital disruption. I think they are, but they may not have figured out a surefire way to avoid an unfavorable outcome.
brooks7
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brooks7,
User Rank: Light Sabre
10/16/2014 | 10:57:16 AM
Re: This is the time to MONETIZE OTT
 

Kbode,

I rechecked iTunes and current episodes of the Big Bang Theory are going for $2.99 in HD and $1.99 in SD.

seven
KBode
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KBode,
User Rank: Light Sabre
10/16/2014 | 9:15:46 AM
Re: This is the time to MONETIZE OTT
The thing I don't like is the fractured nature of these services. If I like one show, I have to buy Netflix. If I want Game of Thrones, I have to buy HBO GO (I'd bet that Amazon Prime deal goes away once their standalone option launches). In the end if I'm paying a half dozen services just to see all the shows I want, how is this going to be better than cable long term? It's an obvious strategy from inside one company, but when considering the overall battle against piracy I find it problematic.
cnwedit
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cnwedit,
User Rank: Light Beer
10/16/2014 | 9:00:26 AM
Re: This is the time to MONETIZE OTT
Seven,

I'd agree that consumers want to pay for only what they want to watch, but if we move to that model, the current content creation and distribution model falls apart. 

It's falling apart anyway, as the old advertising model disintegrates, so maybe this is the time to say, to hell with it, let's find some totally new way of doing things. 

 

Carol 
brooks7
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brooks7,
User Rank: Light Sabre
10/16/2014 | 12:53:58 AM
Re: This is the time to MONETIZE OTT
HBO gets results from Neilson and has for years.

Carol,

Why buy a channel?  I really want to buy shows. I don't want to pay for "True Blood" but really want "Game of Thrones".  

The ability to execute on content is why the content business is so different than the network business.  If you build network capacity, it is highly likely that over some period of time you will make a profit on your costs.  The same is not true on Network Product Development and even less so on Entertainment (Movies, Games, TV).

seven

 
jabailo
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jabailo,
User Rank: Light Sabre
10/15/2014 | 9:57:26 PM
Re: This is the time to MONETIZE OTT
This is a situation similar to Hollywood in the 1970s...when the Studio System gave way to independent producers, using the "network" (move theater chains) to get revenue, but also taking risks individually, on themselves.  
jabailo
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jabailo,
User Rank: Light Sabre
10/15/2014 | 9:55:01 PM
Re: This is the time to MONETIZE OTT
It's funny because wasn't this how the Internet was originally built.  Content providers (webmasters) got some low cost technology and put text directly into the hands of the public.  Somehow this all evovled into various centralized Portals when it came to paid or DRM'd media.

But the idea of the cloud, and now SDN, now lets you build your own cloud piecemeal.  The end result?   Low cost or even high cost entry for the Content Creator, who can cobble together just what he needs to get his product to market.  Directly.

 
cnwedit
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50%
cnwedit,
User Rank: Light Beer
10/15/2014 | 9:40:13 PM
Re: This is the time to MONETIZE OTT
Excellent point, Daniel, and I can see how that is a contributing factor. This just seems to argue further that asking people to pay a lot of money for a huge number of channels - most of which they don't ever watch - is a doomed model. 
danielcawrey
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danielcawrey,
User Rank: Light Sabre
10/15/2014 | 8:29:27 PM
Re: This is the time to MONETIZE OTT
This is HBO going head to head with Netflix. I have continued to notice that Netflix is producing its own shows based of its analytics on what people watch. I'm pretty sure this is working really well for them, and that HBO wants more insight on what kind of shows to produce. 

This is one of the biggest money losers in content, having a show fail. And it happens so often, I think that as we continue to move towards streaming and digital based options the data on what people actually like continually gets better. 
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