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HBO Considers Expanding Subscription Video Streaming

4 Aug, 2014 By: Erik Gruenwedel

HBO, the world’s largest premium television channel, reportedly is contemplating expanding a branded standalone subscription streaming service internationally.

HBO, which has operated HBO Nordics for $11.50 a month since 2012, is considering launching similar services in regions of the world with strong broadband presence and few pay-TV opportunities to sell its channels and content. Markets include Turkey and Japan, according to The Wall Street Journal, which cited sources familiar with the situation.

HBO continues to operate as a cash cow for parent Time Warner, generating about 25% of the media giant’s operating profit in 2013 on a base of more than 114 million subscribers globally. However, Netflix passed HBO’s domestic subscriber base last October, which heightened calls for Time Warner CEO Jeff Bewkes to consider an OTT service in the states.

Of course, with HBO’s lucrative relationship with multichannel video program distributors, in addition to its acclaimed HBO Go TV Everywhere app, Bewkes argues launching a stand-alone branded SVOD service would be fiscally irresponsible.

In May, Bewkes told an investor group he was supportive of over-the-top video services — notably proposed online deals between Disney and Dish Network — since they targeted a younger demographic living in a single-person household with a lone broadband connection.

Bewkes said the proposed Dish/Disney video services could target about 2 million to 5 million subscribers with a restricted content offering. At the same time, the CEO remains adamant OTT video not undermine the majority bundled channel household market.

The latter is key to Bewkes, who has a long history of questioning the viability of subscription streaming — notably Netflix — and its cannibalization impact on traditional distribution channels. Only in recent years as SVOD proves to be a marketing tool of sorts to broadcast and pay-TV, has Bewkes become more accepting of OTT and SVOD.

Indeed, Time Warner in 2014 will generate upwards of $400 million in incremental revenue licensing TV programming and movies to SVOD services.

“[OTT video] seems like promising experiment in market segmentation,” Bewkes said in May.



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