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HBO will finally deliver standalone Web service next year

But don't get your hopes up too high, Roku users.


Allen Weiner


Posted on Oct 15, 2014   Updated on May 30, 2021, 9:54 am CDT

Smiles abound in the cord-cutting community as HBO has pulled the trigger on offering its pay TV to consumers who do not subscribe to either cable or satellite services.

“That is a large and growing opportunity that should no longer be left untapped,” HBO CEO Richard Plepler told Time Warner investors of a standalone HBO service scheduled for 2015. “It is time to remove all barriers to those who want HBO.”

One Twitter follower summed up the feeling of those 10 million U.S. homes that have broadband only and no cable service. Of those household, 5 million subscribe to a streaming video service. 

im so excited/just can’t hide it RT @DKThomp: HBO’s Web-only product: More excitement than details at the moment.

— Elise Hu (@elisewho) October 15, 2014

Plepler did not go into details about how the new service will be launched or proposed pricing, but he did say the premium service will continue to work with pay TV services (cable, satellite). One immediate reaction to the HBO announcement was a drop in Netflix stock, which was down more than 14 points as of 11am ET. Keep in mind, Netflix announces its Q3 results after market close today, so that may also be part of the reason for the wild price fluctuation. Investors are anxiously awaiting details on Netflix’s international expansion plans.

As Henry Blodget, former dot-com equity analyst and current Business Insider editor and CEO correctly points out, there is little rivalry between Netflix and HBO in terms of content overlap. The battle for the consumer digital entertainment dollar may be another story.

Netflix and HBO offer different content. Lots and lots of people will have both. Especially when they dump cable.

— Henry Blodget (@hblodget) October 15, 2014

Among those in the streaming entertainment business, Amazon is the most affected. Amazon’s Instant Video service now includes a hefty amount of content from the HBO catalog. In May 2014, when the distribution agreement was announced, no end date for the deal was mentioned.

Showtime, HBO’s smaller pay TV rival, will also be on the hot seat to follow suit and offer a standalone service for over-the-top viewers. Starz recently announced a standalone streaming service but only for non-U.S. customers.

Whether HBO’s disruptive announcement becomes the tipping point for over-the-top viewing will depend on its rollout strategy. One option is to offer it as a sell-through service to all streaming services giving them a bounty (plus perhaps ongoing revenue) for each sub they bring to the service. At issue, and this is the sticking point that led to a battle between Apple and Amazon over ebook pricing, is whether streaming companies can set their own price for the sale of HBO’s service or be forced to forgo discounting.

Much is made out of the impact on cable and satellite distributors, but given Comcast, Time Warner, AT&T, and a few other major providers are also high-speed Internet service providers, the overall effect could be minimal. Offering HBO’s new standalone service as part of an ultra-high-speed Internet service (1 GBps or more) would just move revenue from one area to another. Consumers can also expect to see creative premium TV bundles that combine a variety of services resulting in a quad-play of cable, Internet, phone, and premium streaming. Premium streaming could include HBO, Netflix, Hulu Plus, and even sports programming.

Premium streaming could also become part of new cloud TV services from Dish and Sony. If the goal of those nascent offerings is to appeal to cord cutters, adding HBO to their packages would be a must.

HBO’s announcement brings with it many moving parts, most of which will be worked out in the coming months. On the surface, this nod toward the growing appetite for DIY television options appears to be a major win, but the world of cable, satellite, and now streaming OTT has technology and economic considerations that can take quickly take the promise out of possible breakthroughs. 

So, if you’re expecting to watch Game of Thrones via your Roku box or Samsung Smart TV, be patient and realistic.

Illustration by Jason Reed

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*First Published: Oct 15, 2014, 1:28 pm CDT