HBO's over-the-top streaming service will be available on Apple devices from launch next month, the company announced yesterday. Branded as HBO Now, the service will cost $14.99 a month and be available via iPads, iPhones, iPod touches and Apple TV set-top boxes in time for season five of Game of Thrones on 12 April. Apple customers signing up in April will get the first month free.
HBO Now will also be available on PCs, and the Time Warner-owned network said it was still in discussion with its 'existing network of distibutors and new digital partners' to offer the service. The service will offer more than 2,000 titles including original series The service will offer more than 2,000 titles, including current series like True Detective, Silicon Valley and Girls, and library shows The Sopranos, Sex and the City, True Blood, The Wire and Deadwood.
Apart from its stablemate Warner Brothers, HBO has long-term movie deals with 20th Century Fox and Universal. The agreement with Fox, which runs to 2022, allows the studio to license movies to iTunes and Amazon within the first-run pay window.
No plans were announced to make the service available outside the US. HBO is already available over-the-top in the Nordic countries, but in markets like the UK where HBO has output deals with partners like Sky, the offer of HBO seems to be precluded because HBO programming is already available on online on demand services (for example, on Sky's Now TV).
Apple's period of device exclusivity is believed to be for three months, this has two obvious consequences:
HBO Now's pricing is not cheap and is in line with the cost of HBO packages from pay TV platforms. On Cablevision, for example, HBO currently costs $14.95 a month, while on DirecTV the option is $18 a month. Subscribers who still want a package of basic channels or sports will not have an obvious incentive to get HBO Now, since they can already access the pay TV company's HBO Go TV Everywhere service. But, for those customers who are not interested in sports the $14.99 price point may be high enough so that the service isn’t a significant incentive to cut the cord.
Another distinction is that HBO Now is offering only the company’s original content – primetime content from the main channel – and not the premium movies that still represent an important element of its schedule. The dearth of movie content is an incentive to retain some pay TV subscribers who may be on the fence. At the same time, by offering its original content in an OTT SVoD fashion, the company is likely attempting to convert a certain amount of the pirate population into OTT subscribers with easy access to the content they pirate most. Any pirate conversion should be seen as a significant victory for content owners.
The move by CBS, HBO, and Showtime (later in the year), are the first exposure that the significant number of Americans are getting to true a-la-carte television (Hulu Plus is in some respects better thought of as a micro-bundle). IHS believes that the success or failure of the three will give the industry an indication of American disposition to consume pay TV content in an a-la-carte fashion. If the services are successful it is likely that their model will be emulated by basic cable network groups. Several channels seem likely targets, especially ESPN, which would likely have to offer itself in the $10-$15 per month range to disincentivise cord-cutters while incentivising pirates. The move from the pay TV macro bundle may have profound consequences to the total number of pay TV channels; it is likely that smaller niche channels will not survive the transition.