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HBO's meek broadband play

Hbo_logo_1 Maybe content isn't really king, as Sumner Redstone has famously declared. Maybe it's just a regent, or a viscount with seats in the royal box. Otherwise, why would so many top content owners be such wussies in the face of their distribution "partners"?
The latest example is HBO, the source of such hot properties as "The Sopranos," "Entourage" and (in previous seasons) "Sex and the City." In an interview last week with the Financial Times, HBO CEO Chris Albrecht said the network was developing a plan to offer its shows online. Brilliant and long-overdue move, Chris! But then the story threw in this groaner: "Mr. Albrecht stressed that any internet offerings would be launched in partnership with cable operators, which it relies on for subscriber fees, the main source of income for the advertising-free network...." That means limiting HBO's Internet delivery to people who already subscribe to the channel on cable (or, presumably, satellite).
That's not how a king thinks. A king would say, HBO's content is responsible for raising cable operators' ARPU. HBO's content also helped to force-march reluctant consumers onto cable's digital tier, when numerous operators shifted the network from their analog channels to digital. HBO would be in deep trouble without cable, but cable can't live without HBO. We're not talking about dropping a few NFL games, as Time Warner did sans souci when it refused the NFL Network's attempted shakedown. We're talking about not having the final season of Tony and Carm.
The Internet offers HBO something cable operators cannot: the ability to reach anybody anywhere. As other networks have shown when they took shows online, there's no cannibalism here. People would much rather watch TV on their living-room TV set than on their PC. It's still too hard for the masses to display downloaded or streamed video on their TVs, so if they have a choice between watching HBO via cable/satellite or the Internet, they'll choose the former. It's the latter audience that Albrecht ought to be thinking about.
Sure, the calculation for HBO might be different from a free over-the-air network like CBS, NBC or ABC. Its existing contracts with cable operators may limit its freedom to move online. And a broadband offering for existing subscribers might make the service more valuable to them, just as HBO's on-demand channel already does. But shouldn't a network with 40 million subscribers (as of the end of 2005) be more concerned about pulling some dollars out of the, oh, 70 million households that aren't subscribing?


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Times editorial writer Jon Healey pens opinion pieces about a variety of business issues, and blogs about technologies that are changing the entertainment industry's business model.

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