All of your favorite HBO shows in one place, available on mobile devices and for a flat, monthly fee without the long-term contract – sounds pretty awesome, right? And, while it might make sense to the masses – people are willing to pay for HBO Go as a standalone service – HBO still won’t budge on the issue, even though it could be a direct competitor to streaming giant Netflix. As you sigh heavily and renew your cable and HBO subscription, first consider the numbers: you might be surprised at how much a standalone service could cost the network.
TechCrunch recently ran a poll on its website to find out how much viewers would pay for a standalone HBO service, like HBO Go, which is currently only available to subscribers. The general consensus ended up around $12. As of now, HBO only nets about $8 per subscription, with the rest of the cash going to cable providers. So, if a standalone subscription would make more money, what’s the big deal? The trouble is that it’s not just about the subscription money. Remember, HBO doesn’t have advertisers and doesn’t have much in the way of marketing on other networks. Instead, they rely on cable providers to sign up potential viewers instead. Think about it: When you sign up for new TV service, you often score a few months of HBO free. That short-term perk often becomes a long-term subscription for HBO when you forget to cancel or get hooked on Game of Thrones. If HBO were to sever its ties and offer a standalone services sans the cable contract, it could alienate their cable clients, who in essence do all of the marketing legwork.
Of course, when you factor in that HBO would then have to market HBO Go without help from cable companies, the cost of each subscriber starts to dwindle. What’s more, HBO would also have to pay for the technology to keep HBO Go running smoothly, which also cuts into profit margin. In the end, while HBO makes less up front using cable and satellite to pimp their wares, the long-term picture of a standalone service could have them losing money initially – HBO needs the backup from TV providers.
As Time Warner CEO, Fernando Laguarda, VP tweeted in June, 2012: “How much would you pay for a health club with just the equipment you use? #economics #impractical” It’s clear that he doesn’t see the value in HBO Go being offered as a standalone service, especially as it could cause dropped contracts for those who only pay for cable to get HBO.
Even though viewers are ready, willing, and able to pay for HBO Go as a standalone service, HBO simply won’t take the risk to switch formats and possibly damage relationships with cable and satellite providers. Selling subscriptions means their livelihood and a continuation of HBO programming like Girls. As a viewer, you can’t be too upset that your HBO subscription also comes with a hefty dose of cable TV channels.
Still, things can always change in the future. Currently, HBO Go is being tested as a standalone in Scandinavia to monitor profits and the feasibility of bringing such a service to the U.S. Armed with the best media, HBO Go could have the opportunity to go head-to-head with Netflix and Amazon Prime, especially because HBO inked a deal in January where Universal movies may not be shown on Netflix for the next 10 years. Having a standalone service could mean movies, shows, and documentaries on your tablet and phone; all without the commitment of a cable or satellite contract.
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