HBO’s much-anticipated, standalone OTT service – HBO Now – is set to launch in April, 2015. Slated to cost USD 14.99 a month at launch, HBO Now will be exclusive to Apple devices during the service’s first quarter. While users will be able to consume content via any browser, potential subscribers will only be able to register for the service via an iOS device, or an Apple TV.
HBO has yet to signal when, or indeed whether, HBO Now will launch internationally. While the network continues to participate in the HBO Nordic joint-venture alongside its Swedish partner Parsifal, HBO Now and HBO Nordic – despite both being standalone services – have little else in common.
Tethering an OTT service to a platform that only represents 35.6% of connectable devices in the US, rather than aiming for a multitude of platforms, does have some merit. Aside from the intangible, but nonetheless very real buzz that only exclusivity and rarity can generate, there are other, material advantages to launching a new product on so homogenous a platform as iOS.
First and foremost, iOS represents an extremely cohesive platform and software ecosystem. Limiting HBO Now’s launch to a single device environment will allow the network to incorporate feedback, and iterate the application itself, without having to implement changes across a wide swathe of devices, app stores, and coding platforms simultaneously. After the service’s initial quarter, HBO will have a relatively mature, de-bugged platform and UI that it will be able to deploy to other devices with relative ease.
Second, there may also be cost concerns that underlie the exclusivity decision. In the past, HBO has been very clear on two matters – showing no interest in biting the hand of the pay TV ecosystem that feeds it; showing no interest in a standalone service until such time as sufficient scale exists in the market to offset a reduction in carriage income. Even if HBO believes that the market is ready, and even though HBO has set a price – in addition to excluding movies from the service – that should minimize any cord cutting effects, or avoid damaging its operator relationships, HBO Now is still experimental in every way. At least initially, restricting device availability is both a form of hedging, as well as a form of cost-control that could have a small but tangible impact on margins.
Third, and somewhat related to the network’s potential economic concerns, iOS users continue to out-consume their Android next-of-kin in online video. Given that iOS devices, as such, over-index relative to their installed base, limiting the HBO Now service to this platform may also be motivated by maximizing-bang-for-the-buck considerations.
However, all things considered, if HBO GO is any indication of HBO’s prowess in app development and ecosystem support, we can expect to see a highly interoperable, widely-supported Now service over time. Currently, HBO GO is accessible on the Apple TV, browsers, the PlayStation 3, the PlayStation 4, iOS and Android platforms, Windows Phone 8.1, the Fire TV, the Kindle Fire, the Roku platform, the Xbox 360 and One platforms, Samsung Smart TVs, and Google’s Chromecast.
Standalone services ultimately rely upon reach. Addressing roughly 1/3rd of the connected device installed base constitutes neither a sensible nor sustainable long-term strategy. We fully expect the Apple exclusivity period to be followed by an aggressive device strategy.