HBO CEO Richard Plepler has announced a huge change to the network’s long-standing business model of collecting fees from distributing its content through cable companies, telling investors on Wednesday that all Americans with an internet connection will soon have access to HBO programs.
By 2015, HBO will launch what Plepler described as “standalone, over-the-top” HBO Go subscription for the roughly 80 million people in the United States who are not currently subscribing to the channel.
“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, describing the initiative as “a large and growing opportunity that should no longer be left untapped. It is time to remove all barriers to those who want HBO.”
Commentators have long wondered why it took the channel so long to recognize and embrace the trend of moving programming online, as the network has long been cautious about cutting the cord with the big cable companies. It launched HBO Go, which allows current subscribers with HBO subscriptions to watch shows online, in 2010 and experimented intermittently with other distribution arrangements. HBO permitted some episodes of Girls and Veep to be streamed online and experimented with selling Game of Thrones on iTunes in Australia and millions of people pirate episodes of popular HBO shows online. But this announcement represents its biggest step yet into the streaming market.
Though Plepler suggested that HBO may work with its current partners on the new venture, the project has put HBO in the same category as the traditional competitors of cable distributors like Netflix and Amazon. How these companies now react to the move will determine both the success of the new HBO service and the very future of the cable business itself.
As Alyssa Rosenberg pointed out in 2012, “If cable companies retaliated to a stand-alone HBO GO subscription service by throwing HBO off their rosters, HBO might have to charge considerably more than it does currently to make up for the fees it would lose.” Those higher prices could turn away eyeballs, leading the network to assume even larger financial loss and jeopardizing the future of its award-winning programming.
But Plepler and his team are betting that the cable companies see the writing on the wall and are willing to accept the growing trend of Americans canceling their cable subscriptions. That recognition could lead to an even greater shift in the way Americans watch T.V. If viewers can watch HBO online, then what’s stopping them from one day selecting other channels a la carte? Popular offerings like ESPN, Discovery Channel, History, USA Network, and TNT will likely thrive under the new arrangement, while other less watched channels will likely go off the air. The new HBO Go could spell the end of channel surfing as we know it.