HBO is all grown up. Once sheltered under the wing of the cable TV bundle, the premium network has now left the nest to try its luck as an independent online video service.
The new HBO Now has launched in partnership with both Apple Inc. (Nasdaq: AAPL) and Cablevision Systems Corp. (NYSE: CVC), and, by the weekend, HBO content will also be available as an add-on package for Dish Network LLC (Nasdaq: DISH)'s Sling TV. Dish said its latest update for that online service will include new parental control features and program guide updates as well.
Both Apple and Cablevision are offering HBO Now for $15 per month, bundled respectively with Apple hardware (service is available to anyone with a second- or third-generation Apple TV, or any iOS device) and Cablevision's Optimum broadband service. Just like HBO Go, HBO Now includes current and past seasons of all original Home Box Office Inc. (HBO) programming. Users who sign up in April are granted a free 30-day trial.
In the Sling TV version of the service, subscribers will also pay $15 per month, but HBO content will be packaged as a traditional linear video stream complemented by the full HBO on-demand library. The new service through Dish is similar to old-style HBO in that it will require users to buy the base Sling TV package in order to access HBO content. However, the monthly fee for Sling TV is only $20 per month, making it much cheaper than a standard cable TV subscription.
The HBO experiment is part of a wave of new Internet and skinny-TV bundles. Although no-one wants to cannibalize the revenue from larger cable subscriptions, programmers and service providers alike recognize that consumers are looking for cheaper and more flexible pay-TV options. (See The Race Is on for Skinny TV and Sling TV – Like Pay-TV, but Skinnier.)
As a way to ease the transition to new online services, providers are building in certain fail-safe mechanisms. For example, Dish, at the behest of its programming partners, is said to be capping the total number of subscribers for Sling TV at 2 million. According to a report in AdAge, if viewership goes any higher, programmers have the right to pull their content from the service.
There are also natural caps on the growth of online services based on what the underlying networks can handle. HBO cautions that users need an Internet connection with a download speed of at least 3 Mbit/s, and that playback quality may suffer during peak usage times.
Sling TV encountered its own streaming problems during the Final Four round of the NCAA college basketball tournament. Numerous subscribers complained of video buffering when Dish was caught off guard by the volume of streaming traffic. In conjunction with the launch of HBO, Sling said it has also updated its service to "reduce overhead and load on our servers" and "provide a more seamless experience to all customers during periods of heavy viewership."
The era of online TV service has begun, but there are still plenty of hurdles to overcome.
— Mari Silbey, special to Light Reading