HBO Launching Streaming Service in Spain19 Jan, 2016 By: Erik Gruenwedel
Move marks Time Warner unit’s first streaming launch since HBO Nordics and HBO Now in the U.S.
HBO is planning to launch standalone streaming service in Spain by the end of the year that would not require a separate pay-TV subscription. The deal is noteworthy as HBO would limit first-run programming to the new streaming service as third-party pay-TV license deals expire.
The launch follows rollout in 2012 of standalone streaming in Finland, Norway, Sweden and Denmark, and HBO Now last April in the U.S., and streaming service in Colombia late last year.
“We follow the money,” CEO Richard Plepler told Bloomberg.
SVOD services have targeted Spain due to the country’s high percentage (50%) of broadband-only households, compared with nearly 20% in the United States.
While HBO hasn’t disclosed HBO Now subscriber data, MoffettNathanson analyst Michael Nathanson last year suggested HBO Now paying subs could be as high as 1.9 million. If true, that would mean the SVOD service has already acquired nearly 20% of the 10.7 million broadband-only households it was launched to get.
Then again, the low barriers to join and exit HBO Now and other SVOD services such as Netflix and Hulu Plus indicate a strong likelihood of subscriber churn.
In the past 12 months, 4% of U.S. broadband households have canceled their Netflix service, representing nearly 9% of Netflix’s current 42 million domestic subscriber base. By comparison, 7% have canceled their Hulu Plus subscription within the past 12 months, a figure that represents approximately one-half of Hulu Plus’s current 9 million sub base, according to Parks Associates.
The HBO rollout comes as Time Warner and 21st Century Fox have publicly stated they would hold back as long as a year licensed content to SVOD players, notably Netflix, in order to stimulate proprietary streaming services, including Hulu Plus, which Fox co-owns with Disney and NBC Universal.
When asked about Time Warner’s decision to withhold licensing content in favor of proprietary services, Netflix CEO Reed Hastings again characterized HBO as a “great competitor,” which he said the streaming service has admired for very long time.
“They will be a formidable global competitor over time, independent of their [corporate] ownership,” he said.
With Netflix upping original content programming 33% this year to 600 hours, CCO Ted Sarandos, on the service’s Jan. 19 webcast, denied the programming uptick was in response to Fox and Time Warner.
“We have been on the trajectory to accelerate original programming … as our budget continues to grow and subscriber base grows, we are licensing more programming and creating more programming,” he said.
Indeed, Sarandos said Netflix is in negotiations to renew a longstanding license deal with The CW, which is co-owned by CBS and Warner Bros. Media reports have suggested The CW would consider going direct-to-consumer as a leverage ploy. Sarandos agreed the such speculation underscores a “time-honored tradition” to negotiate deals in the press.
“[The CW is] great programming, we have a great relationship with with Warner Bros. and CBS on the deal, and we’d like to continue it,” Sarandos said, adding Fox and others remain an important vendor to Netflix.
“We’re also an important source of revenue for them.”