HBO considering offering HBO GO w/o cable

[Chicago_inferiority_complexes]

It's cute, but your examples aren't the same.  To produce that orange is a lot different than producing television content or sports content, and that's what those making the content will argue every day.

As for the millennials, yup but that begs another question that our industry and many others are sorting through.  They don't have much money PERIOD, so what is it that they are willing to pay for when so many of them think the world runs on pixie dust?     There are some that are willing to pay, as I mentioned in the recent study I was involved in, but the question is it worth going down that path.  That is why what happens in the economy in the next 10 years will drive much of this.

When anyone - millennial or otherwise - wants a product, they will pay for it. I see and work with many every day. They are perfectly fine shelling out triple digit payments every month for cell phones, for new cars, for expensive clothes, for songs on iTunes. They must believe they are getting the full value of their dollars on their purchases or they wouldn't be making them every month.

Guess what they aren't spending their money on? Your products.

[Chicago_inferiority_complexes]

Chicos industry is based on the same premise as Obamacare. Get as many people as possible to subsidize the interests of other people and have them pay a fortune for products they don't need or don't want.

Is it any wonder, when it comes to obscene satellite bills featuring products no one wants to watch, and 300% increases in monthly premiums for crap they don't want or need, that people are just simply deciding to opt out?

Basic economics, Chicos.

[ChicosBailBonds]

When anyone - millennial or otherwise - wants a product, they will pay for it. I see and work with many every day. They are perfectly fine shelling out triple digit payments every month for cell phones, for new cars, for expensive clothes, for songs on iTunes. They must believe they are getting the full value of their dollars on their purchases or they wouldn't be making them every month.

Guess what they aren't spending their money on? Your products.

Not exactly.  

Let me share part of the research we did with millenials earlier this month.  I am paraphrasing, but its pretty close (this we repeated by a number of interviewees in one sense or another....not all, but enough that it was a common theme).  It was interesting to us that certain things they believed should be FREEEEEEEEEEEEEEEEEEEEEEEEEE and not compensated for, but other items should be.  Mostly it was due to enabling.  You can't get that Starbucks for free unless your friend is working behind the counter.  Clothes, cars, same thing, but if you can find a way to get things for free...the morality barometer takes a nosedive.  It's easier to get tv for free than a car.



Interviewer:   What video programming do you watch?

Grad student:  I love Game of Thrones, True Blood and Walking Dead

Interviewer:  So you have a subscription to HBO then?

Grad Student:  Well, no.  I just watch it on the torrents, pirated stuff

Interviewer:   Why do you do that?

Grad Student:  HBO is too expensive, I don't want to pay for it and tv.

Interviewer:  If you could get HBO directly without the TV part, would you buy it?

Grad Student:  Honestly, no.  I can get it for free and all this stuff should be free.  It's the public airwaves.

Interviewer:  Interesting.  You do realize it costs money, in fact Game of Thrones is several hundred million dollars to make that show.  If people don't pay for it, shows like this cannot be made.  Incidentally, broadcast television uses the public airwaves, not HBO.

Grad Student:  Yeah, but there are enough people out there paying for it that I don't have to worry about that.  I bought a HBO t-shirt once, so I gave them some money.

Interviewer:  What are you studying?

Grad Student:  Graphic design

Interviewer:   How would you feel if the work you did was no longer paid for, that people should be able to enjoy your work without having to pay for it?

Grad Student:  That's different, I won't be working for a company that makes billions of dollars most likely

Interviewer:  Thank you for sharing your thoughts with us.

[ChicosBailBonds]

Chicos industry is based on the same premise as Obamacare. Get as many people as possible to subsidize the interests of other people and have them pay a fortune for products they don't need or don't want.

Is it any wonder, when it comes to obscene satellite bills featuring products no one wants to watch, and 300% increases in monthly premiums for crap they don't want or need, that people are just simply deciding to opt out?

Basic economics, Chicos.

300% increases in monthly premiums...seriously, what are you talking about?  Our rates went up 4.5% last year to the consumer, despite our programming costs going up 8%...we take the much bigger hit.

As for your comparison to Obamacare, uhm....no.  It isn't against the law to not have television or pay a fine if you don't, it is with Obamacare.  It isn't against the law to downgrade to a different package, not get HBO, etc.  Not even close to the comparison.  Believe me, I think O-Care is a disaster for any number of reasons, but to compare the two is just wrong. 

You want to complain, contact Disney, NewsCorp, Viacom, Turner, Rainbow, the NFL, NBA, NHL, the players unions, SAG, the writers, producers, actors, etc, etc, etc.  Get to the source.

[Chicago_inferiority_complexes]

300% increases in monthly premiums...seriously, what are you talking about?  Our rates went up 4.5% last year to the consumer, despite our programming costs going up 8%...we take the much bigger hit.

As for your comparison to Obamacare, uhm....no.  It isn't against the law to not have television or pay a fine if you don't, it is with Obamacare.  It isn't against the law to downgrade to a different package, not get HBO, etc.  Not even close to the comparison.  Believe me, I think O-Care is a disaster for any number of reasons, but to compare the two is just wrong. 

You want to complain, contact Disney, NewsCorp, Viacom, Turner, Rainbow, the NFL, NBA, NHL, the players unions, SAG, the writers, producers, actors, etc, etc, etc.  Get to the source.

Health care premiums, Chicos. Though I didn't realize you also call your bills "premiums." Interesting.

It's very comparable. The only way for your business model to work is for lots of people to pay for products they don't want or need. Same with Obamacare. Unfortunately for both industries, people are opting out.

[Chicago_inferiority_complexes]

Not exactly. 

Let me share part of the research we did with millenials earlier this month.  I am paraphrasing, but its pretty close (this we repeated by a number of interviewees in one sense or another....not all, but enough that it was a common theme).  It was interesting to us that certain things they believed should be FREEEEEEEEEEEEEEEEEEEEEEEEEE and not compensated for, but other items should be.  Mostly it was do to enabling.  You can't get that Starbucks for free unless you friend is working behind the counter.  Clothes, cars, same thing, but if you can find a way to get it for free...the morality barometer takes a nosedive.



Interviewer:   What video programming do you watch?

Grad student:  I love Game of Thrones, True Blood and Walking Dead

Interviewer:  So you have a subscription to HBO then?

Grad Student:  Well, no.  I just watch it on the torrents, pirated stuff

Interviewer:   Why do you do that?

Grad Student:  HBO is too expensive, I don't want to pay for it and tv.

Interviewer:  If you could get HBO directly without the TV part, would you buy it?

Grad Student:  Honestly, no.  I can get it for free and all this stuff should be free.  It's the public airwaves.

Interviewer:  Interesting.  You do realize it costs money, in fact Game of Thrones is several hundred million dollars to make that show.  If people don't pay for it, shows like this cannot be made.  Incidentally, broadcast television uses the public airwaves, not HBO.

Grad Student:  Yeah, but there are enough people out there paying for it that I don't have to worry about that.  I bought a HBO t-shirt once, so I gave them some money.

Interviewer:  What are you studying?

Grad Student:  Graphic design

Interviewer:   How would you feel if the work you did was no longer paid for, that people should be able to enjoy your work without having to pay for it?

Grad Student:  That's different, I won't be working for a company that makes billions of dollars most likely

Interviewer:  Thank you for sharing your thoughts with us.

Very amusing example, I'll grant you that. Are you hoping that somehow the gap of people who have "cut the cord" consists entirely of pirates, and also that somehow more regulation will force them to pay up? I wonder if you realize to what extent people have "tuned" television out. I know a lot of people who might catch a television show on Netflix or on DVD, if enough people recommend it. But they aren't so obsessed with the latest shows that they need to have triple digit per month TV bills or wade through the swamp of illegal online viewing.

[ChicosBailBonds]

Here's who you have to convince....based on what he and others are saying....not looking good.


http://www.forbes.com/sites/jeffbercovici/2013/08/08/21st-century-foxs-chase-carey-a-la-carte-is-a-fantasy/

[ChicosBailBonds]

Apple...failed

Intel...just threw in the towel last month.... http://www.reuters.com/article/2013/11/20/us-intel-tv-insight-idUSBRE9AJ17620131120    (not that I didn't tell you guys here 8 months ago it would fail, which of course it did.... sigh )

 
Google.... nope...failed.


Maybe some day, but it comes down to the content creators.  You want what you are asking for, you have to convince the content creators.  Good luck

[Coleman]

Not exactly.  

Let me share part of the research we did with millenials earlier this month.  I am paraphrasing, but its pretty close (this we repeated by a number of interviewees in one sense or another....not all, but enough that it was a common theme).  It was interesting to us that certain things they believed should be FREEEEEEEEEEEEEEEEEEEEEEEEEE and not compensated for, but other items should be.  Mostly it was do to enabling.  You can't get that Starbucks for free unless you friend is working behind the counter.  Clothes, cars, same thing, but if you can find a way to get it for free...the morality barometer takes a nosedive.



Interviewer:   What video programming do you watch?

Grad student:  I love Game of Thrones, True Blood and Walking Dead

Interviewer:  So you have a subscription to HBO then?

Grad Student:  Well, no.  I just watch it on the torrents, pirated stuff

Interviewer:   Why do you do that?

Grad Student:  HBO is too expensive, I don't want to pay for it and tv.

Interviewer:  If you could get HBO directly without the TV part, would you buy it?

Grad Student:  Honestly, no.  I can get it for free and all this stuff should be free.  It's the public airwaves.

Interviewer:  Interesting.  You do realize it costs money, in fact Game of Thrones is several hundred million dollars to make that show.  If people don't pay for it, shows like this cannot be made.  Incidentally, broadcast television uses the public airwaves, not HBO.

Grad Student:  Yeah, but there are enough people out there paying for it that I don't have to worry about that.  I bought a HBO t-shirt once, so I gave them some money.

Interviewer:  What are you studying?

Grad Student:  Graphic design

Interviewer:   How would you feel if the work you did was no longer paid for, that people should be able to enjoy your work without having to pay for it?

Grad Student:  That's different, I won't be working for a company that makes billions of dollars most likely

Interviewer:  Thank you for sharing your thoughts with us.

I think morality has very little to do with it. This is really human nature. People respond to incentives, and if they are able to get free content and for them the benefits outweigh the risks, they will do it. I can afford paying for content and for me it's worth it to avoid the (small) risk of some sort of legal action being brought against me, and the (larger) risk of infecting my computing devices with malware. However, for a lot of broke people in my generation, the math doesn't lead them to the same conclusion. And until producers of content give people a viable legal alternative to paying $80+ a month for a cable subscription, content will continue to be stolen and producers of content will lose out on the potential revenue of alternatives.

[ChicosBailBonds]

Health care premiums, Chicos. Though I didn't realize you also call your bills "premiums." Interesting.

It's very comparable. The only way for your business model to work is for lots of people to pay for products they don't want or need. Same with Obamacare. Unfortunately for both industries, people are opting out.

We don't call bill premiums, but there is a part of the service that is called premiums.  HBO, Showtime, Playboy, Starz, Encore, Epix, Cinemax are called premium services on most distributor services.

Its not comparable.  You can't get cheap insurance any longer, catastrophic insurance.  You can get base packages for tv if you wish and everyone would be fine....sure, less revenue, but a lot less cost as well.  You have choices for TV, you extremely limited choices for insurance.  You're a dude, too bad you are getting pregnancy coverage...that's the law.  Yet if you don't want tv, drop it, if you don't want 250 channels, then get 150, get 70 and pay $29 a month...you have many options....put an antenna on your roof and get it for FREEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEEE

[ChicosBailBonds]

Very amusing example, I'll grant you that. Are you hoping that somehow the gap of people who have "cut the cord" consists entirely of pirates, and also that somehow more regulation will force them to pay up? I wonder if you realize to what extent people have "tuned" television out. I know a lot of people who might catch a television show on Netflix or on DVD, if enough people recommend it. But they aren't so obsessed with the latest shows that they need to have triple digit per month TV bills or wade through the swamp of illegal online viewing.

First off, I would recommend you put cutting the cord into proper frame.  Context is everything.  In the last quarter, the industry lost 113,000 net subs.  The year prior, 101,000.  For an industry that has over 100,000,000 subscribers it's a small number.  Important?  Of course.  Is the world ending tomorrow?  No. 

Agree, many people, especially your age, aren't obsessed with it.  Totally understand it.  My kids aren't, they have their shows, but would much rather be gaming, stealing, or whatever.    

One of the issues with piracy is if the industry ever goes to an a la carte model, the predictions are piracy becomes exponentially worse.  Why?  Because those that find value in ESPN today won't at $20 to $25 a month for one channel, but they'll be more than willing to find a way to pirate it.   Some very interesting anti-pirating stuff coming down the pike, especially on the enforcement legislation side.  Politicians know who butters their bread and the Disney, NewsCorp, Viacoms, CBS' etc of the world don't like their stuff stolen, it leaves less $$$$ to go into politicians hands.     I think you will be rather surprised at some of the next waves of enforcement coming down, especially as they work with the pipe providers (the networks) to crack down at the account level of the end user.  You're probably to young to remember the RIAA lawsuits, that will be a walk in the park.

[ChicosBailBonds]

New study out today on a la carte....at least 124 channels would be eliminated, higher costs for consumers, 1.4 million jobs lost.

Total financial loss into the system from advertising, etc...$80 billion to $113 billion. 

Can't wait to hear the politicians sign up for this and all those lost tax revenues as a result.

http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-a-la-carte-pricing-would-cost-billions-of-dollars-20131204,0,4355658.story#axzz2mYDT0I00

[ATL MU Warrior]

New study out today on a la carte....at least 124 channels would be eliminated, higher costs for consumers, 1.4 million jobs lost.

Total financial loss into the system from advertising, etc...$80 billion to $113 billion. 

Can't wait to hear the politicians sign up for this and all those lost tax revenues as a result.

http://www.latimes.com/entertainment/envelope/cotown/la-et-ct-a-la-carte-pricing-would-cost-billions-of-dollars-20131204,0,4355658.story#axzz2mYDT0I00

I didn't spend a lot of time with this, but the "loss" of advertising revenue ($45B I think) is unlikely.  Sure, it won't go to the disappearing networks but it will certainly go somewhere else (surviving nets, digital, etc.)  It wouldn't just evaporate.

[ChicosBailBonds]

I didn't spend a lot of time with this, but the "loss" of advertising revenue ($45B I think) is unlikely.  Sure, it won't go to the disappearing networks but it will certainly go somewhere else (surviving nets, digital, etc.)  It wouldn't just evaporate.

I believe what they were saying is that some would certainly shift to other mediums, but the net impact is not all of it could be shifted and thus the $45b hit is a net number.

[ChicosBailBonds]

I wonder who has been saying that since the get-go.  It isn't technology folks, its content.

Great article on Intel's failure and why Apple, Google, etc have not been able to crack it either.


http://news.cnet.com/8301-1023_3-57613334-93/how-intel-tv-failed-pay-attention-google-and-apple/

[ChicosBailBonds]

A la carte is a farce.....says FOX COO  (not my words, but that's how many of the content makers view it)


http://www.multichannel.com/technology/carey-la-carte%E2%80%99s-%E2%80%98farce%E2%80%99/147126

[brandx]

A la carte is a farce.....says FOX COO  (not my words, but that's how many of the content makers view it)


http://www.multichannel.com/technology/carey-la-carte%E2%80%99s-%E2%80%98farce%E2%80%99/147126

We understand Chicos. Of course they say that - this is how they make their money.

Record companies also said the same thing. Until they didn't. 20 years ago it was unimaginable that we could get ALL of our music without ever buying a physical CD, but....

I think our point is that things will change. We don't know how yet, but they absolutely will change.

[GOO]

I can afford cable but refuse to pay for it.  I paid for decades and cut the cord last fall.
I love my current no cable set up and love only having a bill for 9 bucks or whatever for Netflix. 

I have over the air via antennas in my attic, with a lot of PBS and multiple options on sub-channels.  I get all the networks from chicago and milwaukee, and a lot more choices of the type of shows I like to watch (PBS) than on cable where they gave me one PBS station.
 
I have a Tivo with a 1T hard drive added, which works a lot better than the crappy DVR's that the cable company rented to me (no monthly fee on the Tivo, I got it free from someone who was upgrading, and even if there was, I'd buy it up front and it would pay for itself in a few months by not having cable).

The thing that is really making it a great experience is the added over the air channel choice and my Apple TV.  With the Smithsonian, PBS, and now Bloomberg (just added) on Apple TV, it is really nice to just go and watch full episodes without having to Tivo them or know when they are on.  Having Bloomberg added will be really nice as it adds a 24/7 "true" station to the Apple TV mix. I hope Apple TV adds a Kahnacademy App next. 

Finally, Netflix does it for my daughter, and i watch a show or movie here or there on netflix and enjoy the convenience for Ted Talks.

The above:  Antenna, Apple TV and NetFlix is so much better than having cable.  I really don't even want to add cable and all those junk channels. For my viewing, this is so much better other than ESPN and Fox Sports missing. Do I miss ESPN and Fox Sports?  Yes, a little, but if there is a game I really want to watch, I just plan dinner or lunch around it at a friends or a bar.  I am not a big fan of watching random teams play and have better things to do, so I don't miss it much, and the advantages out way the negatives by far.

I tell you what.  A couple more decent Apps on Apple TV and the cord cutting will continue to escalate.  The cable industry is paying attention and trying some low tier basic cheaper packages without ESPN.  If those take off or if Aereo is declared legal, it is pretty much over for cable.  The networks won't pull over the air and instead will stream to devices like Apple TV, etc.

[Lennys Tap]

We understand Chicos. Of course they say that - this is how they make their money.

Record companies also said the same thing. Until they didn't. 20 years ago it was unimaginable that we could get ALL of our music without ever buying a physical CD, but....

I think our point is that things will change. We don't know how yet, but they absolutely will change.

+10,000. All of the people getting obscenely rich (athletes, owners, networks, talent, tv execs, etc.) from the present rigged wheel system will (for selfish reasons) say "we're different" than other industries who have to compete for their customers.

[GOO]

+10,000. All of the people getting obscenely rich (athletes, owners, networks, talent, tv execs, etc.) from the present rigged wheel system will (for selfish reasons) say "we're different" than other industries who have to compete for their customers.

It also wasn't foreseeable that people would buy one or two songs from an album and not buy the whole album.  Think of it like alacarte for the music industry.  Big change not only in how music is sold due to the technology change, but also how it is sold as individual songs instead of an entire CD/Album at 16 bucks or whatever they cost now.

I saw an article a few weeks ago about some rumblings re the future of sports on cable and how unsustainable it probably is... I agree. 

I admit I can be a cheap guy (no, I don't download free stuff or watch games on the internet for free and would never do that)... But as an example my cable company started charging $5.99 for the 8 year old modem that I had from them... i bought my own and returned theirs.. not because of the $5.99 a month but rather the way they went about it and without giving me a decent new modem.  They try to quietly ripoff the customers, and that is no way to run a business.  It was a hassle that probably wasn't worth saving the $5.99 a month, but I had to get my own modem on principle.   

[GOO]

A big disruption could be coming within a year or a little more, if the U.S. Supreme Court agrees to hear the Aereo case. If they don't hear it, then the slower disruption continues.  Aereo rebroadcasts network TV over the internet, with each subscriber having their own unique antenna. From a legal point of view, it is a very interesting case.

If the U.S.S.C decides in favor of the broadcasters/cable companies, it slows the disruption down.

A win for aereo could really speed things up as far as cord cutting.

http://www.bloomberg.com/news/2013-12-12/aereo-urges-u-s-supreme-court-to-hear-broadcast-tv-case.html

[brandx]

A big disruption could be coming within a year or a little more, if the U.S. Supreme Court agrees to hear the Aereo case. If they don't hear it, then the slower disruption continues.  Aereo rebroadcasts network TV over the internet, with each subscriber having their own unique antenna. From a legal point of view, it is a very interesting case.

If the U.S.S.C decides in favor of the broadcasters/cable companies, it slows the disruption down.

A win for aereo could really speed things up as far as cord cutting.

http://www.bloomberg.com/news/2013-12-12/aereo-urges-u-s-supreme-court-to-hear-broadcast-tv-case.html

I agree on Aereo - except I don't expect them to win.

I use a Roku for Netflix and also have access to hundreds of channels. Like Cable TV most are junk but there are about a half dozen decent ones besides Netflix. If it wasn't for Sports I would cut cable completely.

But back at the turn of the century record execs were adamant that you got the whole album or nothing - they only changed when enough people chose nothing. THEN, the changed their sales model - something they said they could never do and still survive.

Cable can afford to lose 500,000 - 1,000,000 customers a year for a few years, but if the number starts to go where they are losing 2% - 3% a year, they will 'suddenly' figure out that there are new innovative sales models to use.

[Lennys Tap]

I agree on Aereo - except I don't expect them to win.

I use a Roku for Netflix and also have access to hundreds of channels. Like Cable TV most are junk but there are about a half dozen decent ones besides Netflix. If it wasn't for Sports I would cut cable completely.

But back at the turn of the century record execs were adamant that you got the whole album or nothing - they only changed when enough people chose nothing. THEN, the changed their sales model - something they said they could never do and still survive.

Cable can afford to lose 500,000 - 1,000,000 customers a year for a few years, but if the number starts to go where they are losing 2% - 3% a year, they will 'suddenly' figure out that there are new innovative sales models to use.

That has always been my point. They are not unique. They don't have to do it like they do it. They're not looking out for the consumer. They're looking out for themselves. They do what they do because they can get away with it. If push comes to shove, the market will see to it that content costs less and that their own salaries become more reasonable. And, of course, the consumer will benefit.

[brandx]

That has always been my point. They are not unique. They don't have to do it like they do it. They're not looking out for the consumer. They're looking out for themselves. They do what they do because they can get away with it. If push comes to shove, the market will see to it that content costs less and that their own salaries become more reasonable. And, of course, the consumer will benefit.

+1

[ChicosBailBonds]

We understand Chicos. Of course they say that - this is how they make their money.

Record companies also said the same thing. Until they didn't. 20 years ago it was unimaginable that we could get ALL of our music without ever buying a physical CD, but....

I think our point is that things will change. We don't know how yet, but they absolutely will change.

Difference is, the record companies actually let it happen.  The television content companies aren't, not any time soon. 

I'm just passing on what they are saying.  We would love to offer a la carte, but pretty clear those that make the content have absolutely no desire to sell their services that way.