For a network whose slogan is "It's Not TV, It's HBO," HBO has been slow to embrace online distribution methods. That changed last week with the expansion of live streaming website HBO GO. Part of parent company Time Warner's much-discussed TV Everywhere broadband programming initiative, the move marks an ambitious foray into paid Internet content for the company that revolutionized pay television. Can lightning strike twice? Observers have doubts as to whether the service--which would allow subscribers to access programming directly from their cable or satellite provider--can thrive in Netflix's shadow.
- Reputation for quality aside, HBO has fallen into a ratings rut in recent years, writes The Wall Street Journal's Nat Worden. Last year HBO and sister network Cinemax "together lost 1.6 million subscribers...pushing levels down to an estimated five-year low." Netflix, by way of comparison, "added nearly eight million" subscribers in 2010. It finally became clear to executives that viewers had an "appetite for viewing movies and TV shows through broadband instead of traditional pay TV." In this respect, HBO was late to the party, Rivals like Starz were already benefitting from deals to make their "most potent content available in Netflix's streaming-video service."
- By eschewing a Netflix partnership for TV Everywhere, HBO has put "all their faith in one distribution model," writes GigaOm's Ryan Lawler. Unless the network finds a way to stop the subscriber exodus--and add a whole bunch of new ones--he doubts the gamble won't pay off. "86 percent of HBO’s revenues come from cable subscribers paying a premium to use the service," Lawler explains. "[I]t would need those revenues to increase 10 percent or more to make up for passing up on a Netflix deal worth $250 million." In attempting to develop the next Netflix, Lawler argues HBO missed out on the benefits of the current one. "Giving content to Netflix doesn’t have to be an all-or-nothing proposition for cable providers," he argues. It's possible for cable networks to make "back-catalog streams available through Netflix, while also boosting the amount that they receive from cable distributors."
- Then there's the question of HBO GO's content--or lack thereof. Screen Rant's Michael Crider says that while the site now features "pretty much every modern, high-profile show that HBO has ever aired..available in its entirety," the movie offerings are thin."The service still depends on HBO’s cable lineup of movies," he writes. "If you can’t watch a movie on cable, you can’t watch it online. This keeps the selection down to around 200 movies at any given time
This article is from the archive of our partner The Wire.
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