Analyst: HBO Now Could Have 1 Million Subs Already29 Jun, 2015 By: Erik Gruenwedel
The number of paid subscribers to HBO Now, the premium pay-TV channel’s standalone subscription streaming service, could range from 850,000 to 1 million, according to BTIG Research analyst Richard Greenfield.
HBO Now, which launched April 7 for $15 per month exclusively on Apple devices and Cablevision, represented at the time the boldest pay-TV effort to undermine Netflix’s unrelenting meteoric rise. Since then Showtime has announced the pending launch of an over-the-top video service.
ESPN was the first major pay-TV anchor channel to dip its toes in OTT video waters when it in February piggybacked (along with ESPN 2) onto Dish Network’s Sling TV.
While both HBO parent Time Warner and Disney (ESPN) have not divulged their respective OTT video subscriber data, Greenfield used Apple’s iOS app store rankings to approximate the percentage number of users who chose to pay for the service after the free 30-day trial.
The analyst approximated the trial base at 1 million — the majority of which he believes signed up via the iPad or Apple TV. Analyzing the HBO Now app ranking from May 7 (30 days after launch), Greenfield saw no significant downturn in the app’s ranking. Apple does not rank Apple TV, nor has Cablevision disclosed subscriber data.
“If we had seen a dramatic decline in month-over-month rankings after the second billing date (June 7th), we would have been concerned about churn — but that does not appear to be the case. HBO appears to be averaging between No. 8 to No. 9 in the iPhone top-grossing rank and around No. 5 in the iPad rank,” Greenfield wrote in a June 29 blog post.
The analyst said the data suggests OTT video thus far is not cannibalistic of pay-TV, and, in fact, is helping expand its 30 million linear TV subscriber base to Millennials, cord-cutters and cord-nevers.
More importantly, HBO can generate incremental revenue while better understanding the burgeoning direct-to-consumer market. At the same time, Greenfield believes HBO should sync the HBO Now and HBO Go apps, increase access to third-party platforms (Google Play, Sling TV, PlayStation Vue, etc.), and improve the user interface.
For example, HBO — unlike Netflix, Hulu Plus and Amazon Prime Instant Video — does not offer all episodes of shows at once for binge viewing.
“We suspect HBO will look to add even more content that goes beyond what you normally think of on HBO to make HBO NOW an even more robust platform that subscribers want to use with greater frequency,” Greenfield wrote.