HBO Now Goes With Apple for Now
The à la carte online package includes current and past seasons of all original Home Box Office Inc. (HBO) programming for a monthly fee of $14.99. HBO Now will be available exclusively on Apple Inc. (Nasdaq: AAPL) devices for three months starting in April. Subscribers who sign up in April will receive the first month of service for free.
HBO has been clear that it continues to talk with its conventional pay-TV partners about distributing HBO Now. So far, however, no other deals are on the table. Among the top cable companies, Charter Communications Inc. said it is "not commenting on HBO Now for the time being." Cox Communications Inc. released a slightly more detailed statement, revealing that, "We're talking to HBO to better understand the service they've announced, but our distribution agreements have not changed."
Other leading US pay-TV operators have not yet responded to inquiries.
The success of HBO Go is part of what's propelling HBO to unbundle its content from a traditional pay-TV subscription. However, the premium programmer is walking a fine line by introducing an online service that could draw revenue away from its vast roster of cable, telco and satellite TV providers. Those pay-TV operators are important HBO partners, and they would rather that HBO content not be available as a standalone competitive product. Although both HBO and its partners wish to maximize revenue from broadband-only subscribers, they also want to avoid cannibalizing their existing bundled video business. (See HBO Will Go OTT in 2015.)
A Cox spokesperson illustrated that delicate balance by stating that, "The overwhelming majority of our customers prefer to access video via digital cable bundles for convenience, service quality and the unmatched value. That said, our goal remains to provide customers the content they want on the platforms they choose."
Over the last several years, several cable companies have experimented by offering HBO in a slim package of cable channels, often paired with broadband service. Cox has a "Flex Watch" service tier delivering 50Mbit/s broadband with basic cable channels, HBO and Starz for "as low as $59" per month. Time Warner Cable Inc. (NYSE: TWC) offers "Starter TV" with HBO for $29.99 per month plus equipment costs. And Comcast Corp. (Nasdaq: CMCSA, CMCSK) sells an "Internet Plus" package with a basic cable channel line-up, access to HBO and Internet speeds up to 25 Mbit/s for $39.99 per month for the first year. (See Comcast Set to Bundle Broadband & HBO and Time Warner Shakes Up the Bundle.)
— Mari Silbey, special to Light Reading