US media giant Time Warner said Wednesday it would launch a stand-alone HBO streaming service next year, offering viewers without cable subscriptions hit shows like “Game of Thrones” and “Girls.”
The move allows HBO, also known for shows like “Sex and the City” and “The Wire” to enter the streaming-only video market dominated by Netflix.
HBO chief Richard Plepler told an investor meeting that the new service would be aimed at consumers without a cable or satellite subscription, who have not been able to watch the premium channel until now.
Plepler said the move would be “transformative for our company” by delivering the HBO service directly to consumers.
“Currently there are 10 million broadband-only homes in the US,” Plepler said.
“That number is expected to grow. Of today’s 10 million, about half subscribe to a streaming service. These consumers have no access to HBO. That is a large and growing opportunity, that should no longer be left untapped.”
Consumers currently can access HBO online through a service called HBO Go, but a subscription through cable or satellite is needed.
Plepler offered no details on a specific launch date in 2015 or fees for the new service.
He said “we will work with our current partners and we will explore models with new partners” in an effort to reach the 80 million homes which do not currently have HBO.
HBO would offer consumers a streaming video service similar to that of Netflix, Amazon or Hulu, but with a large amount of original content — something the others have only recently begun to produce.
-Cord-cutters sought –
The new service specifically targets “cord cutters” who have been dropping costly cable subscriptions and other consumers who rely on streaming video.
Forrester Research analyst James McQuivey said that for cable and satellite television providers which offer bundles and packages that include HBO, this news means “their worst fears have come true.”
“This move by HBO was inevitable from the moment that people started streaming TV shows online,” McQuivey said.
“HBO has some of the most prized content on the TV screen and it appeals strongly to the young, affluent, educated demographic that is most likely to cut the cable cord in the next five to 10 years.”
Netflix said meanwhile it expected competition from HBO but that the two services can both thrive.
“Starting back in 2011, we started saying that HBO would be our primary long-term competitor, particularly for content,” said a letter to shareholders from Netflix chief executive Reed Hastings and chief finance officer David Wells with its quarterly earnings.
“The competition will drive us both to be better. It was inevitable and sensible that they would eventually offer their service as a standalone application. Many people will subscribe to both Netflix and HBO since we have different shows, so we think it is likely we both prosper as consumers move to Internet TV.”
Nat Schindler at Bank of America/Merrill Lynch agreed, saying the two services are aimed at different audiences.
“HBO’s competitive position against Netflix is interesting as it has some of the best original content in the world and original content has been one of the largest drivers of Netflix subscriber growth in recent quarters,” he said in a note to clients.
“We believe Netflix has broader appeal with its wider range of content for family and children, while HBO is primarily focused on mature content which should limit the competitive impact.”