Wednesday, October 15, 2014

HBO GOes Without Cable

HBO just announced that in 2015 it will start to offer the HBO GO digital content, without a cable subscription.  While there are limited details, HBO has clearly been feeling the heat from Netflix, Hulu, Amazon and others.  And while HBO cable subscriptions continues to deliver valuable revenue, the threat of cord cutting can damage their leadership position.

I wouldn't be surprised to learn that HBO offered some deals with their current cable providers to move in this direction.  Such alternatives might have included revenue guarantees against current customers that might drop HBO cable for HBO GO.  I believe that HBO's research would indicate that they won't experience this shift in viewing.  I suspect that current cable/HBO subscribers will maintain their subscriptions and HBO GO being offered directly to consumers will actually result in more additive growth than shifting of platforms. 

There is certainly a risk that this move by HBO to offer HBO GO and the likely repercussions of other premium services like Showtime and Starz developing a similar move, will ultimately lead to greater cord cutting.  It may also lead to cable companies pursuing more a la carte offerings to deliver a lower priced set of networks for consumers still seeking a cable platform.  At the same time, cable companies must also push for a complete TV Everywhere experience that lets every linear and on demand channel to be accessible via authenticated viewership to its customers.  Till then, this move by HBO is a necessary one to stay competitive against its digital rivals.

The Proliferation Of Sports Networks

The Fall always seems to be the busiest time for sports on television.  You have the end of baseball, the start of football, hockey, and basketball, plus soccer and tons of college football games.  And for each of these games, a network, or two, or four, or eight, etc. to meet the need.  We have in fact over the course of a couple decades seen many of our games move off of network TV onto newly branded cable nets.  And for each new network that is created, the demand for live sports programming helps to raise content fees which ultimately get passed through to the viewer in higher subscription or license fees. 

Where once the broadcast networks were the face for professional and college sports, each has a cable network or more to off load its sports programming.  ABC has the well known ESPN brand including ESPN, ESPN2, ESPN News and more, NBC now has the NBC Sports Network as well as Golf Channel, CBS has its CBS Sports Network and Fox with Fox Soccer, Fox Sports 1 and Fox Sports 2.  Each pro league has its own network, too.  We have NFL and NFL Redzone, MLB Network, NHL Net and NBA Net.  Even non sports cable networks like TBS has deals to carry pro baseball and pro basketball.  And for regional college and professional interests, networks like YES, MSG, NESN, Sportsnet and more make sure your local team is covered.  Plus the Big Ten, SEC, and more.  Tennis Channel makes sure its fans get access to matches while outdoor sport fans have Outdoor Channel, Sportsman Channel, World Fishing Net, ONE World Sports, and more.  And each network wants a license fee for cable carriage.

Wonder why our cable bills continue to rise.  The proliferation of sports networks, especially the ones showing live games, is a primary cause for such high rates.  The demand for live sports are also rating winners too.  But too much of a good thing has the potential to kill the golden goose.  Consumers can only pay so much and need to shave the cable cord on channels or cut the cord on their cable subscription all together.  Its great to have access to such a diverse array of sports and dozens and dozens of channels to view them all, but too much may be too much.