HBO Decoupling from Cable Providers

HBO will be decoupling from cable providers in 2015. No, this is not earth shattering news as much as some people may think, but it is a sign of a change.

HBO-GOFor years, HBO has been intimately tied with cable companies. If you wanted access to HBO you needed to get it through your cable provider. That gave all the power to the cable provider and in most situations that meant having a certain package minimum before you were able to get HBO. If you just wanted basic cable and HBO, sorry for you. Often they would saddle you with a “low” 100 channel package before you could get HBO. Let’s not forget that you were still charged for HBO. So not only would you have to pay for HBO, but you would have to pay for a cable package you didn’t necessarily want so you could get the privilege to pay for HBO.

When 2015 rolls around that will no longer be the case. HBO will be available as it’s own streaming service without the need to go through a cable provider. That means a person with no ties to a cable company can opt to pay HBO whatever the subscription price may end up being and enjoy all the HBO content that it provides.

For the consumer, this is potentially a great deal. For HBO, this is potentially a great deal. For cable companies, this is not a good deal any way you spin it. As a consumer, you are granted the opportunity to go directly to the source for content. That means if you’ve been contemplating getting rid of cable, but have been holding on in order to keep your beloved HBO, you will soon be able to cut that cord.

If you are HBO you now open your market to all the people who refused to buy in cable, but still want your content. Game of Thrones was the number one pirated show for multiple years. No doubt some of that piracy comes from those unwilling to buy into a cable model. By providing the content a consumer wants directly to them without making them jump through extra hoops, grants HBO greater control, and potentially more money in their pockets. When you add in the fact that HBO was apparently unhappy with the install rate various providers were establishing for their product it makes sense that they move their business. They no doubt saw the success of their HBO Go app, while still tied to cable companies and want to expand. Not to mention decoupling allows for them to provide more direct competition to services like Netflix and Hulu. Particularly Netflix who has been dipping into the original content market.

hbogo3If you are a cable company, you are most likely burned and scheming. Yes, HBO going somewhat independent hurts them. There will undoubtedly be a flood of consumers who jump ship now that they have the chance. I would not be surprised if a number of cable providers decide to abandon HBO and refuse to provide it as a service. Those who can’t make such a bold move will likely try to undercut whatever price HBO’s uncoupled service cost will be. What you will see is an attempt by cable companies to restructure their internet pricing. In some markets there are already data caps. It would not be surprising to see more cable companies apply these data caps and implement a tiered structure similar to how telecommunications companies provide data. This will allow cable companies to recuperate money they lose from people who choose to now only get internet.

The decoupling of HBO also brings about implications for other channels or studios owning multiple channels. As I mentioned in my post a couple weeks ago, we seem to be on a slow trajectory toward channels becoming a la carte. HBO’s willingness to break away from their longstanding model in favor of becoming a optional standalone service is just the first sign. HBO will now be able to gain it’s profits directly, which will likely give them a larger pool of money for them to produce shows. If other channels (or studio grouped channels) we will see a shift in which the cable company no longer has control over which channels you can have or can’t based on what tier are in. Instead, people will be able to choose what they want. For channels that thrive on ratings and advertiser support, they will gain greater control and more importantly funding. IF you are able to collect money directly, as long as it is priced correctly, there stands to be a good chance of making money.

Already there seems to be an unraveling of the current model of TV through cable providers with CBS also creating a streaming service. Yes, within 24 hours two networks have decided to allow users easier access outside of cable providers (CBS All Access is available today for $5.99 a month). For those studios it will gain them money and more viewers(potentially more ads to subsidize costs). Note how I don’t say network because for many broadcast networks they air other studios products, thus complicating things. Also adding to my idea that decouple will be more studio based than network based. For cable providers it’s taking away some of their business.

If all these services do come to fruition, that could be a lot of potential individual services, which becomes the major downfall to sub services, but I’ll lead that subject for another day.

Will you go for the standalone HBO service? CBS? Who do you think or hope may go this route next?

2 thoughts on “HBO Decoupling from Cable Providers

  1. if it will save me money, I would totally subscribe to HBO. Not CBS because I honestly can’t think of one show I watch on CBS, but then again, I don’t know what channel half of the shows I watch come on, but this is really interesting if nothing else. I’ll definitely be looking forward to more information on this when the service becomes available.

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