HBO Upgrading HBO Go for a Future It’s Not Ready to Embrace
Consumers could eventually be able to buy HBO Go without having to pay for a subscription to the pay-TV channel if the latest series of hints from HBO CEO Richard Plepler are to be believed–just not anytime soon.
For months now, Plepler has repeatedly suggested such an offering is a possibility, and his appearance Thursday at the Nomura Global Media & Telecom Summit was no exception. This time he went so far as to suggest HBO Go was being upgraded to ensure unspecified consumer “flexibility” and “optionality” while simultaneously making abundantly clear a standalone HBO Go is in no way imminent.
“Right now we have the right model,” said Plepler. ” If we determine down the road that we want to pivot in some way, we’ll be ready to do that. [HBO chief technology officer] Otto Berkes is working with engineers to improve that product. One thing that will not happen in the coming years is we won’t be caught unable to pivot if we so choose but for now, we’re running our business just as we want to run it.”
Plepler likened the current iteration of HBO Go to a BMW 5 Series, but suggested the company wanted to “build the 7 Series. We are working with engineers to do that,” he said, though stopped short of suggesting specific functionality enhancements or release timetable.
The rationale for HBO sticking to its knitting is that that the cost of chasing a relatively small market of broadband-only subscribers is prohibitive, especially when there’s still a much bigger market in the U.S.–about 70 million–who are pay-TV customers who don’t get HBO.
Plepler also reiterated that HBO is unconcerned with the anecdotal evidence suggesting password-sharing for HBO Go is rampant. “Everything we can see on password-sharing is that its very small, that it’s almost nonexistent,” he said.
On a counterintuitive note, Plepler also talked up the importance of the movies that HBO gets from its theatrical output deals relative to the original programming that typically gets much more attention. He shared stats noting that 81% of the content viewing on HBO is theatrical movies and that 40% of its subscribers don’t even watch original programming.
“While original programming is the halo of our brand, our subscribers love the movie,” he said. “Securing that theatrical advantage was very important. Huge advantage with our affiliates and our customers.”
At a time when Netflix is aggressively hawking its original programming like “Arrested Development,” it was a good time to tout a series of deals last year that saw HBO increase its advantage over pay-TV rivals like Starz and Showtime as well as Netflix, which will take over the Disney output deal from Starz beginning in 2016. While Netflix, Epix and Starz each have a single output deal with a major studio, HBO now has 3.5 such deals.
“I think people thought in the financial community that we were going to lose that advantage,” said Plepler. “We didn’t.”