HBO Considers Selling Direct to Better Combat Netflix

[CommanderFrank]

There may be a change in policy over at the HBO corporate offices in the making. Nothing definite, but it sure sounds like Jeff Bewkes, CEO of Time Warner, is softening the stance of offering HBO as a standalone App and selling direct to customers without having to subscribe to a cable channel.

Bewkes didn’t make any announcements, but he certainly sounded more sanguine about the possibility than he has before. Cord cutters have reason for hope; cable operators have much to fret about.

 

[Gorankar]

Been saying this was needed the day they launched it. Will add this service to my list if it is priced reasonably and they don't totally gimp the service to make the cable companies happy. The primary reason they have not done this already is the cable companies I suspect.

 

[dceremuga]

^^^^^^^^^^^^^^^^^ QFT

 

[McFry]

There will be blood. Dish/DirecTV/Comcast have dropped networks like AMC during prime season before, so they arent bluffing if those same threats extend to HBO. 5 years ago I would throw money at HBO, but now that Netflix can compete with their own series I'm not so sure anymore.

 

[rudedog]

Make it $9.99 a month and take my money, any more then $10 a month and I'll pass

 

[mope54]

There will be blood. Dish/DirecTV/Comcast have dropped networks like AMC during prime season before, so they arent bluffing if those same threats extend to HBO. 5 years ago I would throw money at HBO, but now that Netflix can compete with their own series I'm not so sure anymore.

This is my feeling about it, as well. HBO hemmed and hawed too long and now is going to be fighting an uphill battle to win customers back from alternatives.

 

[Spidey329]

Ideally, more channels would take note. I'd love if HGTV/DIY would start offering a stream package. You can already stream their shows if you subscribe to a satellite/cable package.

I think the first to adopt is the premier channels that produce popular shows. Such as HBO, Showtime, and the like. They have more to gain by going solo and cutting out the middle men.

 

[FrEaKy]

HBO would get a TON of instant stream subs just because of GoT.

 

[arr4ws]

Im downnnnnnn !

 

[Lord of Shadows]

Common sense from HBO? Nah the board will never approve it

 

[wizzi01]

Ideally, more channels would take note. I'd love if HGTV/DIY would start offering a stream package. You can already stream their shows if you subscribe to a satellite/cable package.

I think the first to adopt is the premier channels that produce popular shows. Such as HBO, Showtime, and the like. They have more to gain by going solo and cutting out the middle men.

I thought I was the only one that watched HGTV/diy. Lol

 

[mullet]

Common sense from HBO? Nah the board will never approve it

QFT

 

[ytzombe]

HBO might actually go through with it now. Last month was the tipping point for cable companies, there were more customers with internet than with Pay TV. Pay TV is now on the losing end. Future growth will not be in the Pay TV realm, although 40-50 years of constant growth is nothing to be sad about, just means you need to innovate to remain competitive.

 

[Tweak42]

Doesn't sound like they need to "combat" netflix, more like they are well aware and watching the waters carefully for the right time to jump in the pool.

 

[Scooter30]

And how do they plan to do this without the cable/satellite companies raising holy hell?

 

[Ducman69]

IMO we need to get rid of cable companies entirely, and just do direct to consumer sales. If you want telemundo, you pay for telemundo. If you want women's channel, you buy women's channel. Without the middle-man, there should be cost savings as well, since major networks no longer take their cut, and consumers won't have to buy 350 channels to get the 8 channels they actually watch.

 

[Skripka]

Been saying this was needed the day they launched it. Will add this service to my list if it is priced reasonably and they don't totally gimp the service to make the cable companies happy. The primary reason they have not done this already is the cable companies I suspect.

...in a manner of speaking. Yes.


HBO is owned and operated by Time Warner. Put it simply HBO is a cable company, or rather a department of one

 

[teh_chem]

If reasonably priced, and not gimped content, I'd consider it. CONSIDER it...

 

[Puterguru]

The CEO of HBO recently encouraged people to use share their user name and password for that APP in the hopes that it would get more people to subscribe.

 

[Ur_Mom]

IMO we need to get rid of cable companies entirely, and just do direct to consumer sales. If you want telemundo, you pay for telemundo. If you want women's channel, you buy women's channel. Without the middle-man, there should be cost savings as well, since major networks no longer take their cut, and consumers won't have to buy 350 channels to get the 8 channels they actually watch.

That's an excellent idea. I want to see it. But, they would lose some channels because the 17 people that watch that single channel (subsidized by others in a bundle) wouldn't be enough... :/ Oh well, I say. But, for the sellers of those channels, they wouldn't go for it.

I'd jump on that deal, though. I watch 8 channels or so. I can't justify the $80 a month for those 8 channels. So, OTA and streaming for me. I'd love to stream the other channels. I'll either wait for them to do it or just live without. I'm happy either way.

 

[Ducman69]

But, they would lose some channels because the 17 people that watch that single channel (subsidized by others in a bundle) wouldn't be enough...

Which is good. Everyone should pay for the TV series they actually watch. If a TV series isn't watched by anyone, then it should be canceled, rather than just force huge numbers of people to pay for it when they don't watch it. That always annoyed me.

And really the idea of channels should go away entirely too. It should just be about shows, not about channels, as channels are an outdated concept.

If you want to watch Breaking Bad, you should buy access to the show, to watch whenever and wherever you want. What channel it is on or what else is on that channel is irrelevant.

The whole concept IMO of having channels constantly streaming random videos, and if you sit down 15 mins too late you miss the beginning of the show or movie and don't know whats going on is so old school.

If I want to watch Deep Space 9 series 3 because that's where I left off, that's what I should be able to sit down and watch. And hell just bill me on the spot to "unlock" it which I can then view whenever I feel like (or start on my TV and finish on my tablet in the bedroom), but something cheap accordingly like 50 cents, which comes out to $12 a season for that show.

We need to kill the dinosaur to make this future possible though.

RIP Outdated business model.

 

[Menel]

Make it $9.99 a month and take my money, any more then $10 a month and I'll pass

Some people are going to be really really sad if the cable companies did disolve.

$10 HBO
$10 Comedy Central
$10 SciFi
$10 NBC
$10 Netflix
... It begins to add up quick...

 

[xBanzai89]

Some people are going to be really really sad if the cable companies did disolve.

$10 HBO
$10 Comedy Central
$10 SciFi
$10 NBC
$10 Netflix
... It begins to add up quick...

Depends on your needs. OTA+Netflix+HBO is all I need.

 

[Skripka]

Which is good. Everyone should pay for the TV series they actually watch. If a TV series isn't watched by anyone, then it should be canceled, rather than just force huge numbers of people to pay for it when they don't watch it. That always annoyed me.

And really the idea of channels should go away entirely too. It should just be about shows, not about channels, as channels are an outdated concept.

If you want to watch Breaking Bad, you should buy access to the show, to watch whenever and wherever you want. What channel it is on or what else is on that channel is irrelevant.

The whole concept IMO of having channels constantly streaming random videos, and if you sit down 15 mins too late you miss the beginning of the show or movie and don't know whats going on is so old school.

If I want to watch Deep Space 9 series 3 because that's where I left off, that's what I should be able to sit down and watch. And hell just bill me on the spot to "unlock" it which I can then view whenever I feel like (or start on my TV and finish on my tablet in the bedroom), but something cheap accordingly like 50 cents, which comes out to $12 a season for that show.

We need to kill the dinosaur to make this future possible though.
[im g]http://www.gannett-cdn.com/-mm-/f7b32e08caceb69db00282308ec5d62c245085f5/c=0-41-861-689&r=x404&c=534x401/local/-/media/WTSP/WTSP/2014/07/11/1405091117000-Capture.JPG[/img]
RIP Outdated business model.

You're delusional if you think such "cheap" a la carte pricing could ever pay for content. It wouldn't even pay for the studio recording time, never mind the actors and the productions people.

 

[Ducman69]

You're delusional if you think such "cheap" a la carte pricing could ever pay for content. It wouldn't even pay for the studio recording time, never mind the actors and the productions people.

No offense, but you apparently suck at "the maths", or have been brainwashed.

You're not paying for a channel, you're paying for a show directly. Moreover, you're actually watching that show and specifically that show, rather than having your payment distributed over thousands of shows you never even watch. Digital distribution also has negligible costs, especially if a P2P distribution system is implemented.

Consumption is also directly proportional to pricing. If you give access (which costs nothing) for $1 vs $100, you will have magnitudes higher subscriptions to a worldwide audience (since its distributed over the web). That gives a potential audience of billions when priced right.

Besides HBO's revenue alone right now is higher than Netflix in its entirety, with insane profit margins despite high overheads, and the entire industry being grossly overpaid. That Twilight homo with the stupid hair makes $20 million per casting for example. A brain surgeon by contrast makes on average $390K a year. That means that a school bus full of 50 brain surgeons roughly make what this guy makes for looking like an idiot on camera:

I'm glad you're so concerned with his wellfare though. Heaven forbid this guy have to limit himself to buying four tropical islands for himself instead of five. Team Edward...

 

[SGA76]

HBO and AMC get independent of cable and no more reason for cable.

 

[Tankerton]

Digital distribution also has negligible costs, especially if a P2P distribution system is implemented.

It's lower than physical, but far from negligible. Have you see a server warehouse? And I'm not sure anyone is going to agree to a P2P system the way ISPs have already fought Netflix over local peering agreements. It would be pretty difficult to make a P2P video streaming service as big as Netflix work well without some cooperation from the ISPs.

 

[JeffDC]

HBO is owned and operated by Time Warner. Put it simply HBO is a cable company, or rather a department of one

And Comcast now owns NBC. The medium and the message have become the same company.

IMO it's unquestionable that cable TV in its current form will eventually be viewed as an historical abomination, a box that sat in the middle of our homes and spewed relentless conflict and stress, violence, advertising and false need, and its business models (forced advertising, limited channel access etc) viewed as legalized extortion. There's a reason Comcast has the money to buy NBC, and Google the money to buy everything else.

 

[Ducman69]

It's lower than physical, but far from negligible. Have you see a server warehouse?

Worked in our Dallas one for a while, yes, but as a total percentage of costs, its negligible. Its like saying that Star Trek Enterprise costs $370 at BestBuy because of the cost of shipping it:
http://www.bestbuy.com/site/star-tr...uId=24750156&st=the complete series&lp=3&cp=1

It costs $370 because someone is willing to pay that much for it, no more, no less. P2P distribution can be run on a shoestring budget, as outlined here:
http://www.land.ufrj.br/~classes/coppe-redes-2008/biblio/P2P-content-delivery.pdf

At some point we just need to kindly request that the phallus be removed from our rectums... unless you're into that sort of thing.

 

[Skripka]

No offense, but you apparently suck at "the maths", or have been brainwashed.

You're not paying for a channel, you're paying for a show directly. Moreover, you're actually watching that show and specifically that show, rather than having your payment distributed over thousands of shows you never even watch. Digital distribution also has negligible costs, especially if a P2P distribution system is implemented.

Consumption is also directly proportional to pricing. If you give access (which costs nothing) for $1 vs $100, you will have magnitudes higher subscriptions to a worldwide audience (since its distributed over the web). That gives a potential audience of billions when priced right.


I'm glad you're so concerned with his wellfare though. Heaven forbid this guy have to limit himself to buying four tropical islands for himself instead of five. Team Edward...

I'm not concerned with his welfare at all. I work in productions, and I know what things cost. The lead actor/cast is only one piece of the economic puzzle of putting on a show. To make any major TV show requires an army of productions techs and hands in addition to specialists both on site and back in the office in post-production.

The only way $1/per person a la cart pricing would pay the bills is either with an amateur theatre production. You would never break even on costs on a show like DS9

 

[Wrecked Em]

Some people are going to be really really sad if the cable companies did disolve.

$10 HBO
$10 Comedy Central
$10 SciFi
$10 NBC
$10 Netflix
... It begins to add up quick...

I pay $239/mo to have those (and a bunch of others) currently.

 

[SLee]

You're not paying for a channel, you're paying for a show directly. Moreover, you're actually watching that show and specifically that show, rather than having your payment distributed over thousands of shows you never even watch.

In other words, every show is going to be funded by a kickstarter....

Which means the only shows that are going to be created are those by people who already have brand name, or shows based on comic books, or shows about people commenting about video games.

Vince Gilligan, the creator of Breaking Bad may have no trouble raising money for a new series, but what about Vince Gilligan, the co-creator of the Lone Gunmen raising money for a show about a high school teacher trying to cook meth?

 

[SLee]

I'm glad you're so concerned with his wellfare though. Heaven forbid this guy have to limit himself to buying four tropical islands for himself instead of five. Team Edward...

He made big bucks from movies, which already closely follows the model you want than the current TV industry, where hit shows subsidize less popular shows that have critical appeal or new promising shows that may or may not be popular.

So with your model, it's likely that Charlie Sheen would have made even more money from 2 1/2 Men then he already did, the 3 lead actors of Big Bang Theory would be making more than $1 million/episode that they currently do and critically acclaimed shows with low viewership like Breaking Bad (before its final 8 episodes), Mad Men, Friday Night Lights, etc would probably never be made or last more than a season.

 

[Gavv]

HBO is not worth it in my view, even selling this idea, I would not be interested. The price would need to be less than $3 for me to consider it. Even at that the content isn't good enough or not enough new content to keep me interested

 

[Ducman69]

In other words, every show is going to be funded by a kickstarter....

Exactly! Because that's how movies are made today, you have to pay for the movie before you see it in theaters... wait, sorry, let me put my crack pipe down. That's complete and utter bullshit, and I hope you realize that before this latest (and stupid) kickstarter trend, people got investment loans the old fashioned way for decades. And vertical integration has been illegal for half a century now anyway, so I don't mean to kill your buzz but the drugs are seriously affecting your judgement.

 

[Ducman69]

I'm not concerned with his welfare at all. I work in productions, and I know what things cost.

I don't work in productions, and have access to google and can also see exactly how much things cost. The fact that consumers are massively overpaying for entertainment due to lack of competition is a tangent, and what was being discussed here is an entirely different business model, and if you would like to do the math about how you can translate someone paying $150 a month for 300 channels translate to a la carte pay-per-view viewing and the statistics on how price affects viewership, I'd love to see your numbers.

 

[Ducman69]

The only way $1/per person a la cart pricing would pay the bills is either with an amateur theatre production. You would never break even on costs on a show like DS9

BTW, Amazon, with their more expensive distribution scheme, is currently charging $1.99 per episode for major shows like Hell on Wheels, Dr Who, Falling Skies, Walking Dead, etc. Greater market competition if this were to be the norm, along with wider viewership from an international audience from that model means there is certainly more room for cost cutting.

You remind me of the old music record industry that tried to justify their existence and insist that $20 a CD was the cheapest consumers could possibly hope for (when only a tiny fraction of that money actually went to the artist and production of music), when all you really want is the one hit song, and shunned digital distribution. Now, Apple is making an absolute FORTUNE on 99 cent a la carte, which demonstrates that even that is greatly overpriced... oh, and BTW, the artists make more money from that iTunes a la carte digital distribution at 99 cents than retail. A google search will show you that on average the artists makes 7 cents of the 99 cents iTunes cut, so we can see the opportunity for tremendous profits in there still and Apple can clearly afford reduced margins... and those may too come with increased marketplace competition since they are no longer the only game in town for the a la carte digital model.

 

[Skripka]

BTW, Amazon, with their more expensive distribution scheme, is currently charging $1.99 per episode for major shows like Hell on Wheels, Dr Who, Falling Skies, Walking Dead, etc. Greater market competition if this were to be the norm, along with wider viewership from an international audience from that model means there is certainly more room for cost cutting.

You remind me of the old music record industry that tried to justify their existence and insist that $20 a CD was the cheapest consumers could possibly hope for (when only a tiny fraction of that money actually went to the artist and production of music), when all you really want is the one hit song, and shunned digital distribution. Now, Apple is making an absolute FORTUNE on 99 cent a la carte, which demonstrates that even that is greatly overpriced... oh, and BTW, the artists make more money from that iTunes a la carte digital distribution at 99 cents than retail. A google search will show you that on average the artists makes 7 cents of the 99 cents iTunes cut, so we can see the opportunity for tremendous profits in there still and Apple can clearly afford reduced margins... and those may too come with increased marketplace competition since they are no longer the only game in town for the a la carte digital model.

Yes Apple is making a fortune. Guess who isn't? The artist.

A $0.99 iTunes track gives the artist typically $0.09USD per download. Let me put that in perspective. For a recording artist/band to earn the equivalent of a lone-man in a 40-hour federal-minimum wage salary in a year (before taxes) that requires approximately 168,000 downloads. Or in other terms about 13,000 song downloads per month to equal the income of one employee working flipping burgers at McDonalds.

 

[Ducman69]

Yes Apple is making a fortune. Guess who isn't? The artist.

A $0.99 iTunes track gives the artist typically $0.09USD per download. Let me put that in perspective. For a recording artist/band to earn the equivalent of a lone-man in a 40-hour federal-minimum wage salary in a year (before taxes) that requires approximately 168,000 downloads. Or in other terms about 13,000 song downloads per month to equal the income of one employee working flipping burgers at McDonalds.

Yup, and yet more revenue is generated through this model than retail, showing how ridiculously wasteful such old business models are for the consumer (great for the record industry though).

And thank you for agreeing with me that 99 cents is too high a profit margin for Apple, and that such a large sum is completely divorced from the actual money that goes into production like I stated.

Realistically, with greater market competition with this model becoming the norm, realistically the distributor should take no more than 20% of the cut for P2P distribution. As such, 80% should go towards production, meaning if you take the current model you could raise it to 20 cents (well over double) with the distributor getting 5 cents for a 25 cent consumer price, which should also increase consumption and reduce piracy.

 

[Skripka]

Yup, and yet more revenue is generated through this model than retail, showing how ridiculously wasteful such old business models are for the consumer (great for the record industry though).

And thank you for agreeing with me that 99 cents is too high a profit margin for Apple, and that such a large sum is completely divorced from the actual money that goes into production like I stated.

Realistically, with greater market competition with this model becoming the norm, realistically the distributor should take no more than 20% of the cut for P2P distribution. As such, 80% should go towards production, meaning if you take the current model you could raise it to 20 cents (well over double) with the distributor getting 5 cents for a 25 cent consumer price, which should also increase consumption and reduce piracy.

I never said or proved such a thing...and if you read that I did then you're delusional.

And you're still oblivious. It. Doesn't. Pay. The bills.

People gripe about bands sucking these days and a lack of skill/talent. This is why. Because to even afford studio time and recording engineer time, never mind have money to feed yourself and your fellow band members and pay your own personal bills, eats up all the revenue granted you from iTunes. And audio recording time in a studio is downright cheap per hour ($$$/hour depending) compared to the manpower/studio time/post-prod time of doing TV productions ($$$$).

The only people making money of iTunes pricing are the AAA list talent who quite honestly don't need iTunes to sell their wares and can go direct. Everyone else, they're barely breaking even, if that.