• 08-05-2011, 01:06 PM
    Woochifer
    HBO Go: Another Challenge to Netflix? 4M Downloads and Coming Soon to Consoles & TVs
    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

    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.

    Quote:

    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.
  • 08-08-2011, 12:55 PM
    winston
    thanks Wooch, you answered a few question's that I had about this (HBO GO) now I understand the game plan
  • 08-12-2011, 03:40 PM
    Woochifer
    Quote:

    Originally Posted by winston View Post
    thanks Wooch, you answered a few question's that I had about this (HBO GO) now I understand the game plan

    I think HBO's launching the online platform initially as a customer retention measure. Unless they score another runaway hit series on the level of The Sopranos, their subscriber count has topped out (it has remained somewhere around 28 million since 2005).

    The online platform is their way of controlling content, since HBO's fortunes now depend almost entirely on their original programs (didn't know this earlier, but HBO has had more Emmy nominations than any other network for 11 straight years). Judging from how HBO recently opted out of their deal with Dreamworks Animation, it seems that studio movies are now more for filler than anything.

    While Showtime and Starz sold the streaming rights to their original programs to Netflix and other streaming providers, HBO has chosen to hold onto their programs. Starz also had the streaming rights to movies from Sony and Disney, and they sold them to Netflix.

    By creating their own platform, HBO still retains the option to sell the rights to their original programs to other streaming providers like Netflix or Amazon. But, they also have the option of later spinning HBO Go into a standalone subscription site, where anyone without cable/satellite can subscribe.

    Will definitely be interesting to see how this all plays out.