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Originally featured on BroadcastEngineering.com
May 3

Written by:
5/3/2013 5:51 AM  RssIcon

Weeks ago the CEO of HBO, Richard Plepler, was musing about the possibility of a streaming-only option for HBO GO. In other words, there was a chance that HBO could disconnect the pay channel from satellite and cable TV and offer it for a flat monthly fee to owners of streaming boxes such as Apple TV, Roku as well as smartphones like Samsung, Android and Apple. Those fed up with high provider rates who had cut their cords and disconnected from cable and satellite were understandably excited about HBO  Well that was then and this is now. HBO has a new stance on the matter and it’s not good, and it may be the biggest mistake HBO could make. 
 
This week Jeff Bewkes, CEO of Time Warner (which owns HBO), set out to cool growing enthusiasm by flatly stating that there are no plans at all to offer HBO GO without a cable or satellite subscription. He went further and explained that they technically could do it, they have the proper rights, but he does not see it as a very profitable situation. Currently Time Warner can lure subscribers to its service using a variety of draws, and none come bigger than HBO. In fact when a major series such as "Game of Thrones" launches a new season, HBO subscriber rates predictably spike up. Cable TV in particular is big business, and having that leverage of key channels for key demographics can be crucial. It would not be surprising to hear that some stay subscribed to cable just to have access to HBO shows such as "True Blood" and "Game of Thrones." 
 
Time Warner currently sees the market of streaming boxes as not very large it would seem, no doubt they evaluate on an ongoing basis. But it may be missing a larger network of connected tables and larger-screen smartphones. As entertainment goes more portable, it would make sense that entertainment channels go with it. Because traditional cable channels are accustomed to the home user, with their DVR and box, and they are certainly making money from that, they may be missing not only the potential bigger picture but also the future picture. 
 
This could be the best time for HBO to make a move. As streaming channels such as Netflix carve out their own market and set out to take on HBO, Time Warner needs to make sure it doesn't jump in too late. Actually, it may be too late already. This past week Netflix announced that its streaming service now has more U.S. subscribers than HBO has subscribers. Also with Netflix pumping out series such as "House of Cards," "Hemlock Grove" and "Arrested Development" (to name only a few) the pull will only get stronger in the coming months, with HBO subscribers perhaps spending more time on Netflix than ever before. The problem may be that if HBO waits too long, and does not see the emerging streaming and mobile TV market as part of its business plan, it may become the broadcast version of MySpace, usurped by a fast and nimble Facebook. 
 
Will having HBO GO as a separate service cause people to cancel their cable TV? Possibly. But that is happening already. Cable, broadcast and satellite are striving to remain relevant as a tidal wave of mobile, streaming and portable entertainment options rushes in. Cable’s next move will no doubt be more set-top box integration with portable devices via apps, but the fact remains you still will have to buy 500 channels to get the handful you really want. 
 
In the past, you had no choice. With the future of programming as apps, you will have a choice, and it’s going to be up to old media to decide if they are in the race early or if they will be stuck on the sidelines. Whatever happens they had better plan now, as a wait-and-see attitude may not work as well as they think it will. 

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