HBO considering offering HBO GO w/o cable

[akmarq]

Something that has been discussed often here (though usually in relation to sports content). HBO is considering allowing people to pay for HBO GO independent of a cable subscription.

Finally.


http://www.avclub.com/articles/hbo-starting-to-think-letting-people-without-cable,94082/

[jesmu84]

I saw this a few days ago: http://www.muscoop.com/index.php?topic=37202.msg473207#msg473207

You can see the resident TV/media expert's response just below mine.

I certainly would love for them to do it. I can't imagine it would be all that big of a deal to just put their on-demand content as a separate option from cable.

[ChicosBailBonds]

Something that has been discussed often here (though usually in relation to sports content). HBO is considering allowing people to pay for HBO GO independent of a cable subscription.

Finally.


http://www.avclub.com/articles/hbo-starting-to-think-letting-people-without-cable,94082/

They've been "considering it" for a few years now and the math doesn't work.  I'm getting a kick out of these articles.


"Right now we have the right model".  

This is a challenge to HBO, however it would be a risky step for the company to by-pass its traditional distribution partners, which provide HBO with lucrative subscription fees.

There are billions of dollars generated from HBO's existing distribution network and to simply circumvent that would not make business sense, Plepler said in January, according to the Wall Street Journal.





Now, down the road could it change....of course.  But they know for it to change their expenses go through the roof in a way they cannot appreciate.

Hire 20 to 30K agents for one.
The fact that a huge part of this country doesn't have broadband
The fact that almost every distributor has MFN clauses in their contracts that basically say if you sell over the top, they can stop selling it.  Now what...now what happens to all those customers that used to get it from Comcast, or DISH or FIOS who tell HBO to pound sand but they don't have broadband.  That's going to go over well.
The fact that most of the heavy lifting on marketing is done by the distributors to their 100 million customer households, an expense they will now bear.  

I don't doubt it could happen and one day someone will say "I told you so".  No need, one day it will happen.  Today, the math does not work in so many ways.  Kessler, etc...all of these guys have answered the question the same way every year.  Of course they mull it, they would be stupid not to.  That's without even factoring in the ever escalating price of broadband that is coming along with cap limits....another cost to the consumer.

It's a very risky decision for them....one they haven't made yet because the numbers don't add up.  Maybe some day they will....I'm sure they will.

[Chicago_inferiority_complexes]

Chicos, couldn't these bundling companies just go digital? Offer their entire package, or series of packages, online? Is that viable option if selling individual "channels" is not?

I'm not in the mainstream consumer market for these products, but honestly they have all lost me... cannot see paying for them under the existing models... but, again, I am 3 standard deviations away from the norm on this one (literally).

[ChicosBailBonds]

Chicos, couldn't these bundling companies just go digital? Offer their entire package, or series of packages, online? Is that viable option if selling individual "channels" is not?

I'm not in the mainstream consumer market for these products, but honestly they have all lost me... cannot see paying for them under the existing models... but, again, I am 3 standard deviations away from the norm on this one (literally).

Sure, but to do that they risk losing out on the billions they already have.  That's the decision they will have to make.  The one that very few are making because they end up losing more money in the process.  At least today.

[Hards Alumni]

I know this is an old thread, but I had to post this story.  Really interesting.

http://tv.yahoo.com/news/john-mccain-introduces-cable-la-carte-legislation-stop-171331371.html

[ChicosBailBonds]

I know this is an old thread, but I had to post this story.  Really interesting.

http://tv.yahoo.com/news/john-mccain-introduces-cable-la-carte-legislation-stop-171331371.html

Yup, good old John trying this again....tried this in 2006 where it fell flat because of what it truly means for people....like much of what he touches, he has no clue how it works and what will happen as a result.  Less choice, a lot more cost....he didn't finish 5th from the bottom of his class for nothing.  This is why in Canada customers have this choice and are paying much more per channel than they used to and customers are pissed about it and advocating for the old system.  Oh the irony. 

Can't wait to see the complaints by customers now who pay about $5.50 per month for ESPN when they will now pay $20 for that ONE channel.  So instead of paying $70 for 140 channels, you'll pay $55 (save $15) and get 15 channels (if you are lucky).  What a deal.  Can't wait to see what the gov't does when certain special interest channels no one wants, are they going to force them on folks or let them die.       Fun times.  I think when I go to McDonald's next time I'll ask to have the Big Mac without the middle bun and demand a price reduction because I don't want "all of it".  Or perhaps take it further where in the ESPN example I don't care about women's softball, so I should be able to deduct that cost and only pay for certain shows I watch on ESPN.  Say bye bye to a ton of good content if this happens, because there will be no money to develop good projects.  Government and unintended consequences...like a glove to a hand.

[Benny B]

Yup, good old John trying this again....tried this in 2006 where it fell flat because of what it truly means for people....like much of what he touches, he has no clue how it works and what will happen as a result.  Less choice, a lot more cost....he didn't finish 5th from the bottom of his class for nothing.  This is why in Canada customers have this choice and are paying much more per channel than they used to and customers are pissed about it and advocating for the old system.  Oh the irony. 

Can't wait to see the complaints by customers now who pay about $5.50 per month for ESPN when they will now pay $20 for that ONE channel.  So instead of paying $70 for 140 channels, you'll pay $55 (save $15) and get 15 channels (if you are lucky).  What a deal.  Can't wait to see what the gov't does when certain special interest channels no one wants, are they going to force them on folks or let them die.       Fun times.  I think when I go to McDonald's next time I'll ask to have the Big Mac without the middle bun and demand a price reduction because I don't want "all of it".  Or perhaps take it further where in the ESPN example I don't care about women's softball, so I should be able to deduct that cost and only pay for certain shows I watch on ESPN.  Say bye bye to a ton of good content if this happens, because there will be no money to develop good projects.  Government and unintended consequences...like a glove to a hand.

Nick Naylor?  Is that you?

[ChicosBailBonds]

Nick Naylor?  Is that you?

 

Be careful what you wish for, you might just get it.  Besides, you gave up TV already, what do you care.   

[PBRme]

Yup, good old John trying this again....tried this in 2006 where it fell flat because of what it truly means for people....like much of what he touches, he has no clue how it works and what will happen as a result.  Less choice, a lot more cost....he didn't finish 5th from the bottom of his class for nothing.  This is why in Canada customers have this choice and are paying much more per channel than they used to and customers are pissed about it and advocating for the old system.  Oh the irony. 

Can't wait to see the complaints by customers now who pay about $5.50 per month for ESPN when they will now pay $20 for that ONE channel.  So instead of paying $70 for 140 channels, you'll pay $55 (save $15) and get 15 channels (if you are lucky).  What a deal.  Can't wait to see what the gov't does when certain special interest channels no one wants, are they going to force them on folks or let them die.       Fun times.  I think when I go to McDonald's next time I'll ask to have the Big Mac without the middle bun and demand a price reduction because I don't want "all of it".  Or perhaps take it further where in the ESPN example I don't care about women's softball, so I should be able to deduct that cost and only pay for certain shows I watch on ESPN.  Say bye bye to a ton of good content if this happens, because there will be no money to develop good projects.  Government and unintended consequences...like a glove to a hand.

It probably would be a good value for those who do not want ESPN or other sports packages.  They are subsidizing the other side of this equation.

[ChicosBailBonds]

It probably would be a good value for those who do not want ESPN or other sports packages.  They are subsidizing the other side of this equation.

A lot of people are subsidizing a lot of different things so that everyone can get a lot of different choices.  That's part of my point, you go a la carte and a lot of channels go bye bye forever, even if they have a following because 10% following for a niche channel can't be supported in that model.  If everyone is paying 5 pennies per month for it, then it works.  If you are asking only 10% of the households to pay much more than that, then it's a different scenario.

Would AMC be able to create Madmen or Walking Dead without the safety net of guaranteed revenues from all the subscribers that pay into?  Absolutely not.  As a result, they wouldn't risk creating those types of high cost shows anymore.  Makes no sense for them.  They need to know what revenues they can count on in order to invest in the content risks they take in show development.  No different than the sports channels bidding on rights for the NFL, the Big East Network, etc.

[martyconlonontherun]

A lot of people are subsidizing a lot of different things so that everyone can get a lot of different choices.  That's part of my point, you go a la carte and a lot of channels go bye bye forever, even if they have a following because 10% following for a niche channel can't be supported in that model.  If everyone is paying 5 pennies per month for it, then it works.  If you are asking only 10% of the households to pay much more than that, then it's a different scenario.

Would AMC be able to create Madmen or Walking Dead without the safety net of guaranteed revenues from all the subscribers that pay into?  Absolutely not.  As a result, they wouldn't risk creating those types of high cost shows anymore.  Makes no sense for them.  They need to know what revenues they can count on in order to invest in the content risks they take in show development.  No different than the sports channels bidding on rights for the NFL, the Big East Network, etc.

I just think it makes sense to subsidize crappy channels people don't want. Why do you need 140 channels? Lots of useless crap out there that would people could switch to another channel for something similar. Yeah, there would be less competition since there would only be 30 channels, but the quality of each of those channels would be much higher I would think? If they put on crappy shows, people would drop them.

[Benny B]

Would AMC be able to create Madmen or Walking Dead without the safety net of guaranteed revenues from all the subscribers that pay into?  Absolutely not.  As a result, they wouldn't risk creating those types of high cost shows anymore.  Makes no sense for them.  They need to know what revenues they can count on in order to invest in the content risks they take in show development.  No different than the sports channels bidding on rights for the NFL, the Big East Network, etc.

If there's a demand for Madmen or Walking Dead in the home entertainment market, then someone will figure out how to supply those shows to the public.  You could be right that AMC wouldn't be able to create those programs... but HBO - or another channel that masters the pay-premium model - will.  In other words, HBO has never had a safety net of guaranteed revenues, yet they seem to be doing just fine with cranking out hit programming and giving people a reason to subscribe (or maintain a subscription) to their channel.  Shows like Madmen & Walking Dead will survive... shows like Toddlers & Tiaras and Extreme Couponing probably won't.

So Chicos... tell me which world you would rather live in: the one where Honey Boo Boo has a trust fund 10-20x greater than your annual earnings or the one where you expand your horizons in a new job?

[ChicosBailBonds]

http://www.forbes.com/sites/mikeozanian/2013/05/14/senator-mccains-cable-tv-bill-targets-sports-fans-but-would-be-bad-for-everyone/?partner=yahootix

[ChicosBailBonds]

McCain Pushes A La Carte Before Senate Panel; ESPN's Skipper Not Overly Concerned

Published May 15, 2013
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U.S. Sen. John McCain (R-Ariz.) yesterday told a Senate subcommittee that "Americans are at a 'tipping point' as it regards their monthly pay-TV bill and should be given the option of purchasing channels individually instead of as a bundle with hundreds of channels," according to Bob Fernandez of the PHILADELPHIA INQUIRER. McCain said, "I truly believe that a lot of Americans are fed up with their cable TV bills." McCain was trying to "rally support for the Television Consumer Freedom Act of 2013 that he proposed last week." McCain, who has "publicly supported a la carte for years, cited the soaring cost of sports programming and cable-bill inflation since the mid-1990s for the legislation." Former FCC Chair Michael Powell said that cable companies had "invested heavily in their networks and that the bundling of channels allows a diversity of programming that might not be supported if channels were sold individually" (PHILADELPHIA INQUIRER, 5/15).

SKIPPER FIRMLY AGAINST A LA CARTE: ESPN President John Skipper yesterday said that he "isn’t too worried" about McCain's proposed legislation. Skipper after the network's upfront presentation in N.Y. said, "We don't think the bill has any momentum." In L.A., Joe Flint notes Skipper's view that the legislation is a "long shot is shared by many television industry insiders." Skipper said that ESPN is priced "appropriately given the popularity of the channel." He added McCain is "dead wrong" on the issue. Skipper said that the cost for a family of four to go to dinner and a movie is "as much if not more than the cost of a monthly cable bill" (L.A. TIMES, 5/15). Skipper added, "ESPN is not a niche network and I'd like to meet some of these people who don't like ESPN. We have 115 million people a week who engage with ESPN Media … and we think we provide great value." He added the current cable package "provides great value." Skipper: "The average hour of television consumed in a pay television package is $0.23. That's a great value and a great story." A la carte programming "will not provide consumers with better choice or with better economics." The popularity of ESPN and other big networks "allows there to be a huge ecosystem of niche networks with diverse points of view and diverse product and those networks simply will not be able to exist in an a la carte universe" ("Bloomberg West," Bloomberg TV, 5/14).

[MU Fan in Connecticut]

McCain Pushes A La Carte Before Senate Panel; ESPN's Skipper Not Overly Concerned

Published May 15, 2013
Font Size   Resize Small Resize Normal Resize Large  |  Print  |  Share  |
U.S. Sen. John McCain (R-Ariz.) yesterday told a Senate subcommittee that "Americans are at a 'tipping point' as it regards their monthly pay-TV bill and should be given the option of purchasing channels individually instead of as a bundle with hundreds of channels," according to Bob Fernandez of the PHILADELPHIA INQUIRER. McCain said, "I truly believe that a lot of Americans are fed up with their cable TV bills." McCain was trying to "rally support for the Television Consumer Freedom Act of 2013 that he proposed last week." McCain, who has "publicly supported a la carte for years, cited the soaring cost of sports programming and cable-bill inflation since the mid-1990s for the legislation." Former FCC Chair Michael Powell said that cable companies had "invested heavily in their networks and that the bundling of channels allows a diversity of programming that might not be supported if channels were sold individually" (PHILADELPHIA INQUIRER, 5/15).

SKIPPER FIRMLY AGAINST A LA CARTE: ESPN President John Skipper yesterday said that he "isn’t too worried" about McCain's proposed legislation. Skipper after the network's upfront presentation in N.Y. said, "We don't think the bill has any momentum." In L.A., Joe Flint notes Skipper's view that the legislation is a "long shot is shared by many television industry insiders." Skipper said that ESPN is priced "appropriately given the popularity of the channel." He added McCain is "dead wrong" on the issue. Skipper said that the cost for a family of four to go to dinner and a movie is "as much if not more than the cost of a monthly cable bill" (L.A. TIMES, 5/15). Skipper added, "ESPN is not a niche network and I'd like to meet some of these people who don't like ESPN. We have 115 million people a week who engage with ESPN Media … and we think we provide great value." He added the current cable package "provides great value." Skipper: "The average hour of television consumed in a pay television package is $0.23. That's a great value and a great story." A la carte programming "will not provide consumers with better choice or with better economics." The popularity of ESPN and other big networks "allows there to be a huge ecosystem of niche networks with diverse points of view and diverse product and those networks simply will not be able to exist in an a la carte universe" ("Bloomberg West," Bloomberg TV, 5/14).

Chicos,
Despite my monthly cable bill, you have me convinced this is a bad idea.  Is there a middle road option in any of this?  Other than the premium channels my cable company offers only 3 tiers.  Can then offer 6 to 10?  Or does that run into the same issue a la carte?
 

[Chicago_inferiority_complexes]

Having the government push for this is the worst way to do it. The market is coming up with solutions all on its own. I think consumers will eventually demand this without any government interference, as the available consumer options already suggest.

McCain should take a break and get back to the D.C. cocktail circuit.

[Benny B]

The market is coming up with solutions all on its own. I think cConsumers will eventually are already demanding this without any government interference, as the available consumer options already suggest.

Fixed.

Having the government push for this is the worst way to do it.

Very true, provided the cable/sat companies i) don't stand in the way of those looking to adapt to new technologies and distribution models and ii) aren't colluding with content producers.  But if you honestly think that Mickey Mouse is welcoming change and competition with open arms, then there's absolutely nothing anyone can say to change your mind.

[Chicago_inferiority_complexes]

Fixed.

Very true, provided the cable/sat companies i) don't stand in the way of those looking to adapt to new technologies and distribution models and ii) aren't colluding with content producers.  But if you honestly think that Mickey Mouse is welcoming change and competition with open arms, then there's absolutely nothing anyone can say to change your mind.

I agree with each of your points.

I think the things that will break the dam will be when entrepreneurial producers connect more directly with consumers, and existing/bigger content producers are forced to adapt. Isn't Netflix "hosting" shows or something? If things like this gain popularity, eventually the more traditional distributional channels will be forced to change.

[Lennys Tap]

Would AMC be able to create Madmen or Walking Dead without the safety net of guaranteed revenues from all the subscribers that pay into?  Absolutely not.  As a result, they wouldn't risk creating those types of high cost shows anymore.  Makes no sense for them.  They need to know what revenues they can count on in order to invest in the content risks they take in show development.  No different than the sports channels bidding on rights for the NFL, the Big East Network, etc.

So networks like AMC say subsidize us, give us your money up front and maybe will develop a show you'll like? And you, who when I last checked believed in free market capitalism, are OK with this? What's wrong with a hundred or more TV stations failing if nobody watches them? If AMC has some good ideas, find investors to back them - don't tell ESPN to foot the bill until (if) you produce a hit show.

[Coleman]

So networks like AMC say subsidize us, give us your money up front and maybe will develop a show you'll like? And you, who when I last checked believed in free market capitalism, are OK with this? What's wrong with a hundred or more TV stations failing if nobody watches them? If AMC has some good ideas, find investors to back them - don't tell ESPN to foot the bill until (if) you produce a hit show.

+1

[ChicosBailBonds]

If there's a demand for Madmen or Walking Dead in the home entertainment market, then someone will figure out how to supply those shows to the public.  You could be right that AMC wouldn't be able to create those programs... but HBO - or another channel that masters the pay-premium model - will.  In other words, HBO has never had a safety net of guaranteed revenues, yet they seem to be doing just fine with cranking out hit programming and giving people a reason to subscribe (or maintain a subscription) to their channel.  Shows like Madmen & Walking Dead will survive... shows like Toddlers & Tiaras and Extreme Couponing probably won't.

So Chicos... tell me which world you would rather live in: the one where Honey Boo Boo has a trust fund 10-20x greater than your annual earnings or the one where you expand your horizons in a new job?

Who is going to fund it Benny?  Who is going to fund the creation of the next big show with no built in audience and sustained revenue to allow it to happen in the first place?  This is what you guys continue to forget time and time again.  You look at it POST hit, not development of shows.  Most shows fail, but the revenues they can count on from these fees allows them to take risks to develop and create the shows to begin with.  Without those guaranteed revenues, there will be many fewer risks taken and those shows will not be made.  It's very simple.  You aren't going to see huge bets made on a show that can't have a guaranteed revenue stream or guaranteed audience, the math doesn't work.

As long as the Dems are in power, this whole thing is a complete pipe dream.  The creative types in Hollywood can't do their craft without the revenue that allows them to create.  So its D.O.A. from the start.  The sports leagues also will kill it.  As I've said many times before, this isn't a technology issue, this is a content \ revenue \ creation issue.  Way different than the music industry, the mistake people keep making and keep pounding their head into submission time and time again.

This is still years away, and there will be huge ramifications when it comes into play.

[ChicosBailBonds]

Having the government push for this is the worst way to do it. The market is coming up with solutions all on its own. I think consumers will eventually demand this without any government interference, as the available consumer options already suggest.

McCain should take a break and get back to the D.C. cocktail circuit.

Consumers have demanded it...Canada is a test case and it's failing miserably.  Look, the distributors like us would LOVE to have this a la carte, our CEO preaches it all the time.  We would love to go to Viacom and say we will take MTV, and Nick and two other channels, but the other 7 you offer we don't want.  Guess what happens when we try this?  Viacom says you can have all 17 of our channels for $1 billion a year or you can have the four channels only you want for $999 million.  Which do you prefer?  As such, the distributors have to be able to recoup their costs so they have to bundle as well.  The content companies refuse to break up the channel costs, and I've explained many reasons why they refuse to do so.  ESPN needs the money to pay the NFL, NBA, college conferences.  AMC needs it for content development, just as Fox, Viacom, etc do.  Make it a la carte, and now the cost goes WAY up per channel, many channels disappear entirely because they are too niche (how is that going to fly with politicians when Black Entertainment goes away because of not enough subscribers...or Univision....or women's programming....etc, etc).

People don't understand what it means...it's a populist argument that people don't get.  People don't realize the pipeline of new shows dries up, even MORE commercials will be added to subsidize for the revenue lost, channels will go away entirely, choice reduced, and costs rise.  Sounds like a gov't idea to me.

McCain should retire.

[ChicosBailBonds]

So networks like AMC say subsidize us, give us your money up front and maybe will develop a show you'll like? And you, who when I last checked believed in free market capitalism, are OK with this? What's wrong with a hundred or more TV stations failing if nobody watches them? If AMC has some good ideas, find investors to back them - don't tell ESPN to foot the bill until (if) you produce a hit show.

There is no such thing as a true free market, not in this country....you, of ALL people should know this.  But let's keep playing along Lenny....guess what, Marquette you don't get any TV money anymore because Fox isn't going to give it to you because they won't get the fees from distributors to pay them.  Guess what Chicago Bears, bye bye to all your television money...better yet, you only get the money if you win and people watch your broadcasts...no more equal sharing.  Damn that socialism in tv and sports.  Be careful what you wish for, you might just get it.

[ChicosBailBonds]

Fixed.

Very true, provided the cable/sat companies i) don't stand in the way of those looking to adapt to new technologies and distribution models and ii) aren't colluding with content producers.  But if you honestly think that Mickey Mouse is welcoming change and competition with open arms, then there's absolutely nothing anyone can say to change your mind.

Technology isn't the issue.  Never has been, not sure how often I need to tell you this.  Those other technology methods are being employed by the very same companies you suspect might be colluding. 

If the content producers thought they could earn more money selling direct, they would do it.  You are kidding yourself if you don't think that isn't the case.  Cut out the middle man.   The question becomes, do you want to do business with ESPN\Dinsey and cut them a check every month, and then one with CNN, and then one with FOX, and one with AMC, and one with Viacom, and then another check you write to Scripps because you can't get your Food Network, and then another check to Discovery.   Good luck with that.....Disney, Time Warner, Viacom, Fox, etc, etc would do it in a second if they thought it would line their pockets.  Distribution systems work for a reason, no different than why the music companies are largely in bed with Apple and others...the will do it if it makes sense.   There's a reason why right now it doesn't make sense for many of the reasons I have laid out often.  Someday it might, but the content providers need the money for this business model to create content or buy licensing etc.  The mistake you and Lenny are making is trying to fit this into a traditional widget model, which absolutely isn't the case.