For 40 years, HBO reigned as the hard-to-beat premium cable channel, first as the place to watch unedited movies and marquee sports events in the pre-VCR era, then as a destination for totally uncompromised television series. With 30 million U.S. customers, it easily surpasses competitors such as Showtime and rarely cedes any real estate in the zeitgeist thanks to savvy programming such as “Game of Thrones” and “True Blood.”
But last week, HBO got a reality check when Netflix's U.S. subscription numbers passed them, due in large part to the popularity of a streaming video service that launched less than six years ago. That landmark alone does not signal a full paradigm shift, but it is just the latest example of new media finding a niche and turning it into a whole new market.
In a recent column, I discussed how Netflix was in talks with domestic cable providers to place the service in Cox and Comcast's channel lineup, which would effectively make Netflix a lot like HBO. But now, should HBO become more like Netflix?
In at least one sense, it already made that shift with HBO Go, the network's multiplatform online service that gives subscribers full access to most of the network's series archive and all current movies and specials through laptops, smartphones, tablets, Roku boxes and Apple TVs. As a result of that expansion of HBO's on-demand viewing, there has been a steady drumbeat among industry observers over HBO possibly “cutting the cord” and allowing non-cable or satellite customers to access the service. I'm starting to wonder if this is strictly a media-generated question, or if it's just wishful thinking on the part of Netflix's brain trust.
As I see it, HBO would lose more than it would gain if it suddenly started letting people who are not served by cable or satellite access to their service. HBO would miss out on some valuable marketing and promotion that comes from maintaining its alliance with the broadband people, such as those nice trial offers that come with cable or satellite agreements and the prominent place HBO gets in advertisements for their services. Remember: Netflix wants to be in all the places HBO has called home for four decades. HBO could actually be ceding ground to Netflix by letting its ironclad relationship with cable providers fall away at the precise moment Netflix is trying to cuddle up to these entities.
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