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Time Warner CEO Open to Selling HBO Go to Non-HBO Households

25 Sep, 2013 By: Erik Gruenwedel

Time Warner CEO Jeff Bewkes

With 70 million domestic households not subscribing to HBO, Time Warner CEO Jeff Bewkes said offering the broadband-based platform of the premium channel to non-subs would be a good thing

Time Warner CEO Jeff Bewkes Sept. 25 told an investor group he is open to selling HBO Go to households currently not carrying the premium content channel.

The TV Everywhere platform is designed to extend HBO’s reach over the Internet and is considered a benchmark in terms of functionality and user-friendliness to over-the-top services such as Netflix. Yet, the reality remains that 70 million U.S. households do not subscribe to HBO. Indeed, HBO has more subscribers (80 million) outside the United States, and around 30 million domestically.

Heretofore, HBO has remained a bundled premium channel offering with the exception of standalone distribution in Scandinavia, Holland and other foreign regions without strong multichannel video program distributors.

When asked at the Goldman Sachs Communacopia confab in New York if he would be amenable to targeting non-sub households in the U.S. through a third-party ISP, Bewkes said the concept was a no brainer.

“We would be very interested in it,” Bewkes said.

He said the key would be in marketing it to the correct market through a third-party ISP without alienating its MVPD infrastructure that includes HBO.

Bewkes said discussions about “cord-nevers,” consumers who don’t subscribe to a bundled channel offering represent a small minority of the market, maybe 5 million to 6 million households.

“If you’re asking us at HBO, where do you think the likely next subscriber is? Is it the 70 million homes who have bought 200 channels of stuff and they haven’t bought HBO? Or is it the five or 10 [million] who didn’t buy either HBO or [pay-TV]? I think [the answer] is pretty obvious.”

Bewkes said he believes MVPDs would be interested in marketing broadband-only access to HBO. The CEO believes that if distributors targeted their best subs (who don’t get HBO) with a broadband HBO Go, the premium channel could pick up 10 million ancillary subs.

He said implementing such a rollout through MVPDs doesn’t result in competitive pressures with other premium channels. Bewkes contends rollout of HBO Go as a standalone entity has largely been stymied by a “laxity in the pay-TV focus” among distributors selling premium channels such as Showtime and HBO.

Bewkes said distributors need to sell the concept to their high-margin subs, which include triple-play and high-speed.

“We see growth in there for HBO Go domestically,” he said.

Interestingly, Netflix CFO David Wells, speaking at a later session, said Netflix and HBO could appreciatively increase their respective subscriber bases if marketed as standalone properties by multichanel video program distributors.

Wells said that if one eliminated rural households with limited broadband availability, there still exist 60 million to 90 million pay-TV households that could subscribe to Netflix and a standalone HBO.

"We believe that if [HBO] was direct to consumer with similar device penetration [as Netflix], ubiquity, freedom and control, there would be materially more subscribers that would pay for that in the U.S.," Wells said.




About the Author: Erik Gruenwedel

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