“That is a large and growing opportunity that should no longer be left untapped. It is time to remove all barriers to those who want HBO,” Plepler told a Time Warner investor meeting today.
Plepler confirmed that a service will launch with HBO’s “current partners” in the US market next year, although he did not provide details of how much it will cost, and whether the company will use its own technology or work with existing players. The HBO Chairman believes that an online service could complement the firm’s existing offerings and help it reach new audiences.
“All in, there are 80 million homes that do not have HBO and we will use all means at our disposal to go after them,” he said.
The beauty of Netflix is that the programming is available without the need to buy a core cable package. That takes away a lot of the complication behind becoming an HBO subscriber. Yet, the bulk of HBO’s marketing comes from its alliance with cable companies, so going standalone on the Web removes some of that advantage. Thus, it would make sense for the company to offer a slightly different selection of programming online, so as not to cannibalise its primary business.
While Netflix’s growth demonstrates a market for ‘cord cutters’, it is by no means clear that this market is large enough to replace HBO’s cable-based customer base.
Another challenge is that HBO is also relatively late to the game. Netflix is far from the only challenger when it comes to online video streaming. Both Hulu and Amazon Prime Instant Video are established in the US, the latter in particular continues to beef up its catalog with original programming and licensed content — all of which also feeds back into the Prime subscription for Amazon’s e-commerce empire.
There are a lot of questions at this point, but HBO and Plepler have made the first step by confirming this move, which the company has previously admitted it was thinking about.