[opendtv] LA Times: HBO Now stand-alone service shakes up TV industry
- From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Tue, 24 Mar 2015 01:36:44 +0000
Here are some key comments from the LA Times recent article:
> "Cable and satellite TV providers, and rival streaming service Netflix,
> declined to comment."
One wonders whether these ISPs would have anything to comment about, if it were
just another web site?
> "He [Plepler] joked that there were '4 billion reasons' to adhere to HBO's
> long-standing business model to partner only with pay-TV companies rather
> than offer its service directly to consumers. HBO generates roughly $4
> billion in revenue each year through its affiliation deals with pay-TV
> companies, including Time Warner Cable, Comcast Corp., DirecTV and Dish
> Network."
Four billion reasons ... until subscriptions to HBO began dropping, of course.
Just like that one article from months ago described. Why would "the bundle"
break up? That's why. And this explains it more:
> "'You are seeing technology companies take advantage of the frustration that
> exists with the existing pay-TV system,' said Steve Beck, founder of cg42, a
> management consultant firm. 'For years, cable TV was the only way that
> consumers could access the content they wanted to watch. They subscribed not
> because they loved their cable TV provider but because it was the only way to
> see the content. But now there are alternatives.'"
But now there are alternatives, Craig. This is not business as usual.
This other article, from June 2012, explains exactly why a service like HBO Now
is attempting to become a reality. Namely, "For HBO, Still Beholden to a Cable
Company." In spite of Craig's insistence otherwise, many people don't want to
be "beholden." As these articles make plain.
http://bits.blogs.nytimes.com/2012/06/10/disruptions-for-hbo-still-beholden-to-a-cable-company/
Bert
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http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-hbo-now-apple-20150310-story.html
HBO Now stand-alone service shakes up TV industry
By Meg James contact the reporter
March 10, 2015, 3:00 AM
The Apple Watch stole the spotlight at the tech company's media extravaganza
Monday. But it was an announcement at the same event, made by HBO, that marks a
true turning point.
HBO Chief Executive Richard Plepler introduced HBO Now, a $14.99-a-month
service set to launch next month on Apple devices, representing the first time
the premium cable network will be offered directly to customers - a tectonic
shift for the television industry.
"This is the moment," said James McQuivey, an analyst with Forrester Research.
"We'll look back and say this was when the game was fundamentally changed."
Consumers who complained they'd drop their cable if only they could get HBO now
have their chance. Along with sports, HBO long has been considered part of the
glue that holds the pay-TV bundles together. Until now, viewers couldn't get
immediate access to HBO programming such as "Game of Thrones," "Girls," "True
Detective" and a vast library of Hollywood movies without signing up for a
package of pay-TV channels that typically costs more than $100 a month. Soon
they can.
"This is a transformative moment for HBO," Plepler said from the stage of a San
Francisco theater, introduced by Apple CEO Tim Cook.
Driven by video alternatives available on computers and smartphones, consumers
are demanding more options and more personal choice for their entertainment.
And the television industry - after years of resistance - is beginning to bend
to those demands.
Because HBO has some of the most sought-after programs on television, its
decision to offer a stand-alone service is expected to accelerate the
dismantling of bundled pay-TV channel packages in which households pay for a
wide range of programming, even for channels they never watch. The move also is
expected to prompt pay-TV distributors to offer smaller and less-expensive
packages to consumers.
"This action by HBO will certainly encourage cord-cutting," McQuivey said,
referring to the process of ditching cable and its monthly bill for online
video alternatives.
Monday's deal gives Apple a three-month period to exclusively offer HBO Now on
its iPhones, iPads or Apple TVs. After that, HBO is expected to offer the
service to users of a wide variety of other devices. The window gives Apple TV
bragging rights and marketing attention as it competes against video streaming
alternatives such as Google's Chromecast, Amazon's Fire TV and Roku.
On Monday, Cook said the Apple TV prices would drop from $99 to $69, closer to
competitors' prices.
HBO first signaled its plans to offer a stand-alone streaming service last
fall. Plepler's eye was on the roughly 10 million homes in the U.S. with
high-speed Internet service but not a pay-TV subscription, a market segment
that skews young.
Just a few years ago, Plepler was part of the crowd of TV industry executives
that resisted change in the face of successful streaming services Netflix, Hulu
and Amazon.com.
He joked that there were "4 billion reasons" to adhere to HBO's long-standing
business model to partner only with pay-TV companies rather than offer its
service directly to consumers. HBO generates roughly $4 billion in revenue each
year through its affiliation deals with pay-TV companies, including Time Warner
Cable, Comcast Corp., DirecTV and Dish Network.
"You are seeing technology companies take advantage of the frustration that
exists with the existing pay-TV system," said Steve Beck, founder of cg42, a
management consultant firm. "For years, cable TV was the only way that
consumers could access the content they wanted to watch. They subscribed not
because they loved their cable TV provider but because it was the only way to
see the content. But now there are alternatives."
The deal with Apple had been in the works for nearly a year.
HBO saw Apple as a natural partner: 60% of the hits on its HBO Go app, offered
to current cable subscribers, came from Apple devices, Plepler said. He also
expects to benefit from Apple's considerable marketing muscle to promote HBO
Now.
HBO is not alone in its migration to Internet delivery. Several other
established networks - including CBS, the Tennis Channel and children's channel
Nickelodeon - have introduced so-called over-the-top stand-alone services
during the past year. Satellite TV giant Dish Network in January unveiled its
Sling TV, a package of TV channels including ESPN and TBS, which also is
delivered over the Internet for $20 a month.
Last week, NBC acknowledged that it was working on a stand-alone comedy channel
that will likely feature such shows as "The Tonight Show With Jimmy Fallon."
Nearly 70% of the audience for Fallon's show already watch clips online rather
than tune in at 11:35 p.m. when the show runs on NBC.
HBO is pricing the service - at $14.99 a month - considerably higher than the
fees charged by competing streaming services such as Netflix and Hulu Plus. One
reason: HBO wants to keep intact its long-standing relationships with pay-TV
operators.
HBO already costs pay-TV customers about $15 a month in addition to their basic
plans. About 33 million subscribers in the U.S. currently receive the service
through their cable or satellite TV companies. By offering its new HBO Now
stand-alone service at roughly the same cost, people who already subscribe to
pay-TV and HBO won't have a financial incentive to suddenly cancel their
subscriptions, the theory goes.
"This just proves that the future is not binary, it's multi-lateral," Plepler
said later in an interview. "We are going to continue to have big partnerships
with our current providers as well as big partnerships with technology
companies like Apple. And all of this will benefit consumers who will have
access to our programming."
Cable and satellite TV providers, and rival streaming service Netflix, declined
to comment.
Times staff writer Paresh Dave contributed to this report.
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- » [opendtv] LA Times: HBO Now stand-alone service shakes up TV industry - Manfredi, Albert E