HBO Considering HBO GO For the Masses

Sean O’Neal of The A.V. Club on HBO considering cutting the cord:

But HBO’s chief executive Richard Plepler now seems to be coming around on at least one of those: He tells Reuters that the network is considering allowing access to its popular HBO GO service to people who don’t have cable TV, and looking into partnering with broadband providers to package it with monthly Internet services. This is still just in early talks; as mentioned before, HBO would have to deal with its current distribution partners and take care not to disrupt an arrangement that still generates billions of dollars for everyone involved.

This is a drastic 180 from where HBO was a year ago, and it really surprises me that they would talk about this if it wasn’t close to becoming a reality. This idea makes some sense, and it seems likely they would restrict this only to broadband providers who also have cable services, which in theory means that individual providers wouldn’t lose subscribers over this. This probably makes sense for HBO, but O’Neal references a $10 to $15 price range, which seems highly unlikely to me. DirecTV charges about $15/month to add HBO to an existing plan right now. HBO would almost certainly have to make an agreement not to undercut that price (for now). Otherwise, cable providers that don’t provide internet access (like DirecTV) would be screwed. I would expect the price of something like this to start at least $20, which would probably still be OK with most people who don’t have a cable subscription.

The reality is that most people that have a cable package with HBO don’t have a cable package just so that they could have HBO. So most of the people who would be interested in this option would be those who don’t have cable already, which is why the price must be high enough to deter people from dropping their cable subscriptions. But if HBO comes in above that price point there is no reason to think that there would be a mass exodus from cable/satellite plans.

The number of HBO subscribers was holding strong last year (I haven’t seen updated numbers recently), but cord cutting is only now starting to gain steam with more “regular” people. HBO is a progressive enough company that they can see where things are going, but they can’t just bite the hand that feeds them all at once. By finding a way to keep money going to the cable providers (through their ISP arms) they can try to appease these companies while also taking advantage of an untapped market. The advantage of HBO using cable plans though, is that they don’t need as much of their own infrastructure, and get some free marketing from them as well.

If HBO pulls this off, expect the floodgates to open. This is the opening that consumers are hoping for to potentially lead to a more “a la carte” model of channel selection. Other premium networks could follow, and then the whole world of television could change. That is when cable providers will need to worry.