Yesterday, HBO announced that it had 800,000 subscribers on its standalone streaming service, HBO GO. CEO Richard Plepler was optimistic:
“I wouldn’t say only 800,000 subs,” Plepler said in a response to an analyst who had used the word “only” in his question. “We’re just getting started. … I think we’re going to make a lot of progress.”
I would argue that HBO will certainly grow, but I don’t see it getting anywhere close to Netflix or Amazon Prime subscribers, principally for cost reasons. Let’s break down some of the math:
Netflix: $10/month — I would argue that this counts as almost an “entertainment essential” for many families
Amazon Prime – $8/month — Even if the streaming content isn’t as wide as Netflix, Amazon does carry slightly older HBO content. Besides, many families and individuals will get Prime for the free shipping.
Hulu, MLB, NFL, etc – starting at $8/month — for those who like newer TV, or Seinfeld reruns.
HBO — $15/month. Frankly, I think that for many customers, these extra few dollars per month is a spendy non-essential, especially considering that older episodes are available on Amazon Prime, and newer shows can be purchased ala carte in iTunes.
This means that, for most customers, the cost of entertainment would clock in at least $65/month (assuming that basic internet costs about $40/month). (Considering that a Verizon TV+Internet+Phone package is about $70/month [not including HBO], the benefits of cord-cutting seem less impressive. Ben Thompson of Stratechery makes the argument that, considering how much TV most families watch, cable is actually not a bad deal).
I think that HBO’s availability on platforms beyond cable TV will undoubtedly expand its audience, but as long as there are traditional methods (HBO on cable), alternatives for older content (Amazon), cheaper options (iTunes), and free avenues to access (pirated content), HBO GO will face a longer battle for domination of users’ entertainment options.
Silicon Spatula 