HBO cuts cable’s cord with streaming option
Starting in 2015, viewers can buy Web service as stand-alone product
NEW YORK – Next year HBO is cutting the cord and selling its popular video-streaming service HBO Go as a stand-alone product, as more Americans choose to watch the Web, not the TV. Viewers longing to see “Game of Thrones,” “True Detective” and “Veep” will no longer have to pay big bucks for cable and satellite contracts. Is this the end of pay-TV as we know it?
“HBO and ESPN are the two main reasons why people have cable and satellite TV,” said Forrester analyst James McQuivey. “The whole industry has eyed them for years nervous that one day they would decide to do exactly what (HBO) said they’ll do in 2015. We don’t know until we see pricing and packaging how rapidly this will force a change in the way pay-TV operators work, but it will definitely force a change.”
Millions already have canceled pay-TV subscriptions – up to 10 million U.S. households are currently broadband-only. And about 45 percent of Americans stream television shows at least once a month, according to research firm eMarketer. That number is expected to increase to 53 percent or 175 million people by 2018, it says.
Video streamers aren’t falling behind on entertainment – so-called “cord-cutters” watched about 100 hours of video per month during the first half of this year, estimates the Internet research firm Sandvine. The trend accelerated as Netflix’s Internet video service expanded into original programming and bought the rights to show popular cable network shows such as “Breaking Bad” and “American Horror Story.” Netflix’s 36 million U.S. subscribers now watch about 100 minutes of Internet video each day, calculates BTIG Research analyst Rich Greenfield, based on Netflix disclosures about its customers’ overall viewership patterns. Netflix-watching accounts for about one-third of U.S. Internet traffic in the evening, according to Sandvine.
Amazon.com Inc., Yahoo Inc. and Google’s YouTube also offer Internet-only series as alternatives to pay TV.
HBO has about 30.4 million subscribers, according to research firm SNL Kagan. HBO CEO Richard Plepler said Wednesday that the network’s move is aimed at targeting the 80 million homes in the U.S. that do not have HBO but may want access to its content – and especially those broadband-only homes.
“That is a large and growing opportunity that should no longer be left untapped,” Plepler said at parent Time Warner Inc.’s investor meeting in New York. “It is time to remove all barriers to those who want HBO.”