Tuesday, June 26, 2012


Dove head-first into yet another discussion about HBO yesterday. You know, the one where everyone wants to pay for HBO without having to first subscribe to cable. Don't get me wrong, even though I want this to happen I do realize HBO probably won't be offered sans cable any time soon. The umbilical cord must be cut first, and ma cable is doing her best to hide the scissors.

Harry Marks was also in on this discussion, and it prompted him to write a short post on the subject. While I agree with most of his conclusions, I want to share a few thoughts of my own. The first has to do with price. Harry writes...
"The cable companies work with HBO to secure worthwhile deals for their subscribers so these premium channels don’t cost upwards of $20 per month - the starting price, Carmody states, that HBO would have to charge if one were to access the channel independently of the current cable structure."
True, HBO would need to charge more for cable-free access. $20 a month for HBO does sound like a lot, but I would certainly be willing to pay it—maybe even $25. Why? Look at it from a cord-cutter's perspective... Right now our only option is to sign up for a ~$40/month basic cable package, add HBO for ~$15, then pay at least $5 more to rent the required HD-DVR. That's $25 vs. $60+ a month—still sound expensive? "But you get 70+ extra channels too!" Sorry, not interested. I can subscribe to Netflix and Hulu+ and still pocket almost $20 a month.

If HBO needs $25 a month for a standalone subscription, then OFFER IT AT $25. Let consumers decide if that's too expensive! Unfortunately this isn't likely to happen. HBO is one of the few remaining trump cards the cable companies have left to play (live sports is another). About the only thing I see changing this is the collapse and/or reboot of the cable industry as we know it. Which brings me to...
"So, not only have we screwed the cable companies out of money (which will be reflected in a higher bill due to their needing to recoup costs), but fewer people will pay for HBO as a result of the higher prices. Fewer subscribers means less money to produce shows like Game of Thrones, which means less content and eventually no reason to pay for HBO at all."
This IS coming, and it will be painful. Painful for the cable companies fighting to stay out of the red, and painful for consumers who will no doubt be used as temporary flotation devices. While I have no faith in the current cable business model going forward, I do believe HBO can be salvaged if the shackles are removed before it's too late. Whether or not HBO goes down with the ship will be up to Time Warner. If HBO loses too many subscribers before it's set free, it may be game over.
"As much as we hate the current system, it’s the only reason we can watch shows like Game of Thrones at all."
This is one line I definitely disagree with. The secret sauce that allows multi-million dollar shows to be made is simply a large paying audience. I do agree that it's incredibly naive to think an upstart company could create a show like Game of Thrones. Any company that doesn't already have enough money to bankroll the project themselves would have a hard time finding investors. Movie studios might be able to pull it off since they already have the resources. Instead of "Direct to DVD" we could possibly see "Direct to Streaming" content, but a much likelier source would be companies like Netflix and Hulu. Actually "likelier" is being modest. Both Netflix and Hulu are already starting to produce their own original content. No, the budgets for the shows don't currently rival those of Game of Thrones, but as subscribers grow there is no reason why they can't and won't. Netflix already has almost as many subscribers as HBO (25 million vs 29 million). Being embedded in practically every TV and TV-related device shipping today should help them continue their growth. If HBO won't give people what they want, someone else most certainly will. That's the whole reason the cable industry is in their current predicament.

High quality television will find a way into existence as long as people care to watch. We won't be doomed to expensive bundles and poor customer service forever.