HBO to Offer Standalone Streaming Service Next Year
HBO will launch a standalone, web-based "over-the-top" service in the U.S. in 2015, letting viewers get HBO for the first time without requiring a broader cable or satellite subscription.
After much speculation, CEO Richard Plepler made the announcement during parent Time Warner's investor conference on Wednesday morning, saying the time had come to capitalize on the growth of video viewing over the web.
"That is a large and growing opportunity that should no longer be left untapped," he said. "It is time to remove all barriers to those who want HBO."
The question is what effect the move will have on streaming players such as Netflix, which has long said HBO is its main competitor, and pay-TV companies that have held onto subscribers partly because they were they only way to get HBO.
"Starting back in 2011 we started saying that HBO would be our primary long-term competitor, particularly for content," Netflix CEO Reed Hastings said in a letter to shareholders later Wednesday as Netflix reported its latest results. "The competition will drive us both to be better. It was inevitable and sensible that they would eventually offer their service as a standalone application. Many people will subscribe to both Netflix and HBO since we have different shows, so we think it is likely we both prosper as consumers move to Internet TV."
Other popular cable channels may eventually make moves similar to HBO. CBS Corp. CEO Les Moonves has hinted that the company may consider selling Showtime directly to consumers, bypassing pay-TV providers, while ESPN recently laid the groundwork for a web-based service that would stream live NBA games even to non-cable, non-satellite subscribers.
During a Q&A session later in the investor conference Mr. Plepler said none of the TV distributors are going to be upset by the news. "They will make money with us," he said, noting that the service will be streamed via broadband from these providers.
He said he does not think the new service will undermine cable subscriptions, adding that 85% of Netflix subscribers are also pay-TV subscribers.
The over-the-top service has the potential to produce hundreds of millions of dollars in additional revenue for HBO, along with international opportunities, Mr. Plepler said. "This will be transformative for our company," he said. The goal is to drive profit over the long-term, with 80 million homes that currently don't subscribe to HBO subscribers.
"This is the most exciting inflection point in the history of HBO," he added.
HBO also plans to roll out its first brand campaign in 20 years next year.
In the absence of an HBO service that doesn't require a pay-TV sub, many consumers have been borrowing friends' and family's HBO Go passwords to access the network. On Twitter, the hashtag #MyHBOGoPassword is currently trending, with users identifying whose password they are using to watch shows like "Game of Thrones" and "Girls."
My friend/co-worker/cousin/emergency contact. #MyHBOGOPassword— Joeneal R. Berry (@TxfricnAmericn) October 15, 2014
My friend's ex-girlfriend's sister's boyfriend's dad #MyHBOGOPassword— Jessica McCune (@JessAtWE) October 15, 2014