A new standalone online service offered by HBO is being launched in 2015. As such, consumers will no longer need a subscription for cable or satellite, this according to Richard Plepler, chief executive of HBO.
The goal is to create a major shift within the television industry. For a long time, this industry has reaped tremendous benefits by forcing ever-growing bundles on consumers when in fact, just a small fraction of the offered programs are even viewed.
Specific to cable and satellite packages, HBO is ranked as one of the most valuable channels. However, company executives believe that distributing partners of cable and satellite have not provided a large enough cut of the industry’s high profit stemming from paid television subscriptions.
Although the cable model has experienced pressure from new competition to include Netflix, among other digital entertainment platforms, consumers have stayed with cable subscriptions in order to watch live sports on ESPN and high-quality content on HBO.
In a statement at HBO’s at Investor Day, hosted by the parent company Time Warner, Plepler made it clear that next year the company wants to reach far by launching a standalone and over-the-top service that has potential to produce revenue of hundreds of millions of dollars. He added that there is also opportunity internationally, which could be much bigger.
Although no details pertaining to the digital plans were revealed, the company will reportedly begin selling the new standalone service in the US, as well as two additional countries prior to making it available to other countries served.
Having made $4.9 billion in revenues for 2013, HBO is among the fastest growing Time Warner units. HBO, along with ESPN, is currently seen more as a requirement to the cable model and while over two million subscribers added HBO since January 2014, there are definite growth limitations using cable subscriptions.
Within the United States there are roughly 10 million broadband-only homes, which are expected to increase. Plepler stated that the opportunity is not only large but growing and because of this, now is the time to break barriers for consumers who want HBO.
The latest statistics show that some 80 million homes in the US are still without HBO, which is now the new target for growth. To bring the standalone online service to fruition, HBO will continue to work with current partners but add new partners as well.
The plans for HBO’s standalone service marks a dramatic turn for Time Warner. While many consumers like the idea of paying separately for HBO without a cable subscription, others are concerned that if the price exceeds $20, it may be difficult to justify due to piecing together a number of online subscriptions.
Even after the HBO standalone online service launches next year, the cable bundle will probably stick around. After all, there is still a commitment between cable news and live sports with cable television that will linger for years.