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Look out, cable TV, Netflix! Here comes HBO to the Internet

HBO has long offered some Internet video streaming to its existing cable customers. Starting in 2015, HBO will fully embrace the cord-cutter revolution by delivering a standalone Internet service.
Written by Steven Vaughan-Nichols, Senior Contributing Editor

The cable TV company just got a shot right to their chops. Home Box Office (HBO), the most successful premium "cable" TV network, has just announced that it will be offering an Internet streaming subscription.

HBO GO style Internet TV streaming will be available to anyone who wants to pay for it in 2015.

HBO chairman and CEO Richard Plepler announced at the Time Warner investor meeting that HBO will offer a stand-alone HBO streaming service in 2015. Plepler said, "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."

Previously, HBO had offered an Internet streaming option, HBO GO, that was only available to existing cable or satellite HBO customers. HBO GO offers its viewers on demand access to current HBO series, such as Game of Thrones, Boardwalk Empire, and Girls; movies before they reach the current Internet video providers; and full runs of older HBO series such as The Sopranos, The Wire, and Sex in the City. While HBO has released no details yet of what shows would be offered or how much the service will cost, it seems safe to presume that the new Internet HBO will mirror HBO GO's video offerings.

"In 2015, we will launch a stand-alone, over-the-top, HBO service in the United States," Plepler continued. "We will work with our current partners. And, we will explore models with new partners. 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.”

The rise of cord-cutters — people who don't subscribe to any cable or satellite TV service — clearly played a role in HBO's decision. Plepler noted that there are currently 10 million broadband-only homes, and "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."

HBO is also making this move, according to a report in Multichannel News, because the company has been too reliant on its current cable and satellite partners to sell and market its services. In addition, Plepler believes that Internet HBO could bring "Hundreds of millions of dollars" in additional revenue.

HBO's Internet TV move spells big changes for three interrelated industries: Cable and satellite TV providers; Internet TV providers such as Netflix and Hulu; and Internet Service Providers.

For the first, HBO, along with ESPN, has always been a source of up-selling cable and satellite services. With HBO available as an a la carte Internet service, this will certainly shrink their revenue possibilities.

As for the Internet TV providers, Netflix has long been the biggest of the services, but HBO's presence in the market will give them even more serious competition than Amazon currently provides. HBO doesn't release it subscriber numbers, but SNL Kagan, a media research and analysis firm, estimates the number at 28.7 million customers. In its most recent quarter, Netflix reported that it has more than 50 million customers.

HBO's move will also devalue Amazon's recent deal to exclusively stream many of HBO's most popular series.

Last, but never least when it comes to Internet video, ISPs have already seen Netflix and YouTube take up more Internet bandwidth than all other Internet services combined. The result has been the net neutrality wars: ISPs, who are often also cable providers, are demanding — and getting — additional fees from video providers for providing them with the high-speed bandwidth they need for their viewers.

HBO, with its Time Warner connection, will also face trouble getting its shows in front of its customers on some cable ISPs. For example, Comcast still blocks Roku users from watching HBO GO.

Personally, as someone who cut the cords years ago, I'm looking forward to being able to subscribe to the new Internet-only HBO. At the same time, I expect there will be technical-business problems before everyone will be able to watch the new HBO.

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