Woochifer
08-05-2011, 01:06 PM
Studios Profiting Big Time With Netflix and Amazon Fee Increases
Over the last few months, the studios have hit the proverbial lottery with the huge streaming rights fees that they've negotiated with Netflix and Amazon. CBS/Paramount saw their net profits more than double, as the new rights fees with Netflix kicked in last quarter. Basically, they padded an extra $200 million to their profit statement by doing nothing different than they had been doing -- handing the keys over to a vault of old TV shows and movies that weren't generating much revenue to begin with.
HBO On The Sidelines .. Until Now
Amidst all this wheeling and dealing, HBO has steadfastly stood on the sidelines. They still do not provide content to streaming providers (only PPV and for-purchase downloads are available). But, it turns out that they might have an ace-in-the-hole of their own.
HBO Go: Very Intuitive and Useful, Complements HBO on TV Very Well
HBO Go is HBO's new streaming platform, and it went online back in May. HBO Go carries the complete episodes in HD for several of their original programs, along with movies currently airing on HBO.
Having used HBO Go a few times, IMO the interface is light years better than Netflix and Amazon. Of course, HBO Go is also carrying a much lighter catalog with 40 TV series, ~100 other original programs, and 300 movies, compared to 20,000 titles on Netflix. But, what HBO Go offers up is far more focused and in depth -- with behind-the-scene features, blogs, fan posts, cast info, etc. Plus, HBO Go streams current episodes of current series -- something that no other provider can offer.
Big Uptake Since Going Online
In two months, the iOS/Android app alone has been downloaded 4 million times. And that doesn't include millions of others who access HBO Go using a regular web browser. Even more exciting is that HBO is actively pursuing hardware manufacturers to place HBO Go on gaming consoles, set-top boxes, and networked TVs.
Where HBO Go Fits Into HBO's Business Model
Unlike Netflix and Amazon, HBO Go is not available as a standalone online service -- you have to have an HBO subscription via cable/satellite. And that's where HBO's business model differs from Netflix.
It's All About Subscriber Retention
HBO's US subscriber base is somewhere around 28 million households, and this has stayed about the same since 2005. Unlike Netflix, which is trying to add subscribers as fast as they can, HBO for now is trying to prevent defections -- like what periodically happens when a high rated series like The Sopranos or True Blood goes into hiatus.
The preliminary data looks very encouraging. A survey of HBO Go users found that 85% of them wound up spending more time watching HBO programs on the TV network after downloading and using the HBO Go streaming app.
This means that HBO's streaming app is creating a beachhead for the broadcast network. While it might seem counterintuitive that watching online video would actually increase TV viewing time, this is consistent with what happened when Hulu went online. In the case of Hulu, TV programs (especially serialized dramas) that got posted onto the site saw the broadcast TV ratings go up.
Is This a Netflix Killer? - Business - Motley Fool - msnbc.com (http://www.msnbc.msn.com/id/44018620/ns/business-motley_fool/#.TjwXxGFXGkc)
The linked article makes a very good point about HBO Go serving as a sort of loyalty bonus, much like Netflix used to offer up streaming as an added bonus for people subscribing to the DVD-by-mail service.
However, Time Warner is using the same tactic Netflix perfected over the past four years by positioning streaming as a loyalty bonus. It will keep HBO popular and relevant, even during the programming lulls.
Couch potatoes don't have infinite streaming time, and HBO Go -- for the tens of millions of HBO subscribers -- will tweak the perceived value of Netflix's stand-alone streaming plan.
If the preliminary viewing patterns hold up, it means that HBO Go has effectively kept thousands of subscribers locked into the broadcast network, even when favorite programs go on hiatus and subscribers might otherwise be tempted to cancel HBO until the new season for those shows start.
Over the last few months, the studios have hit the proverbial lottery with the huge streaming rights fees that they've negotiated with Netflix and Amazon. CBS/Paramount saw their net profits more than double, as the new rights fees with Netflix kicked in last quarter. Basically, they padded an extra $200 million to their profit statement by doing nothing different than they had been doing -- handing the keys over to a vault of old TV shows and movies that weren't generating much revenue to begin with.
HBO On The Sidelines .. Until Now
Amidst all this wheeling and dealing, HBO has steadfastly stood on the sidelines. They still do not provide content to streaming providers (only PPV and for-purchase downloads are available). But, it turns out that they might have an ace-in-the-hole of their own.
HBO Go: Very Intuitive and Useful, Complements HBO on TV Very Well
HBO Go is HBO's new streaming platform, and it went online back in May. HBO Go carries the complete episodes in HD for several of their original programs, along with movies currently airing on HBO.
Having used HBO Go a few times, IMO the interface is light years better than Netflix and Amazon. Of course, HBO Go is also carrying a much lighter catalog with 40 TV series, ~100 other original programs, and 300 movies, compared to 20,000 titles on Netflix. But, what HBO Go offers up is far more focused and in depth -- with behind-the-scene features, blogs, fan posts, cast info, etc. Plus, HBO Go streams current episodes of current series -- something that no other provider can offer.
Big Uptake Since Going Online
In two months, the iOS/Android app alone has been downloaded 4 million times. And that doesn't include millions of others who access HBO Go using a regular web browser. Even more exciting is that HBO is actively pursuing hardware manufacturers to place HBO Go on gaming consoles, set-top boxes, and networked TVs.
Where HBO Go Fits Into HBO's Business Model
Unlike Netflix and Amazon, HBO Go is not available as a standalone online service -- you have to have an HBO subscription via cable/satellite. And that's where HBO's business model differs from Netflix.
It's All About Subscriber Retention
HBO's US subscriber base is somewhere around 28 million households, and this has stayed about the same since 2005. Unlike Netflix, which is trying to add subscribers as fast as they can, HBO for now is trying to prevent defections -- like what periodically happens when a high rated series like The Sopranos or True Blood goes into hiatus.
The preliminary data looks very encouraging. A survey of HBO Go users found that 85% of them wound up spending more time watching HBO programs on the TV network after downloading and using the HBO Go streaming app.
This means that HBO's streaming app is creating a beachhead for the broadcast network. While it might seem counterintuitive that watching online video would actually increase TV viewing time, this is consistent with what happened when Hulu went online. In the case of Hulu, TV programs (especially serialized dramas) that got posted onto the site saw the broadcast TV ratings go up.
Is This a Netflix Killer? - Business - Motley Fool - msnbc.com (http://www.msnbc.msn.com/id/44018620/ns/business-motley_fool/#.TjwXxGFXGkc)
The linked article makes a very good point about HBO Go serving as a sort of loyalty bonus, much like Netflix used to offer up streaming as an added bonus for people subscribing to the DVD-by-mail service.
However, Time Warner is using the same tactic Netflix perfected over the past four years by positioning streaming as a loyalty bonus. It will keep HBO popular and relevant, even during the programming lulls.
Couch potatoes don't have infinite streaming time, and HBO Go -- for the tens of millions of HBO subscribers -- will tweak the perceived value of Netflix's stand-alone streaming plan.
If the preliminary viewing patterns hold up, it means that HBO Go has effectively kept thousands of subscribers locked into the broadcast network, even when favorite programs go on hiatus and subscribers might otherwise be tempted to cancel HBO until the new season for those shows start.