IP&TV News: What have you been able to learn from the launch of HBO Now on iTunes? What was notable about this announcement?
Ed Barton: It’s worth remembering you’ll still be able to access HBO Now through a web browser, so people can watch via PCs and laptops which are very widely used to watch OTT video although you still have to pay through iTunes… so HBO obviously don’t want to get involved in the complexities of billing and account management.
It’s also notable that this isn’t the HBO live broadcast stream, it is on-demand and shows broadcast on HBO won’t be available till the next day on HBO Now. So if you are a huge Game of Thrones fan you’ll have to ignore social media for up to 24 hours to avoid someone dropping a spoiler or three.
Were you surprised when the OTT service was first announced? Are there any real risks for HBO here?
Not really. There was an air of inevitability about HBO moving outside the pay-TV bundle as there is for any channel with a strong brand and good enough content to attract a sufficiently large audience. It was a small surprise that they went exclusively with Apple but we expect them to broaden distribution across all platforms at some point and I’m sure they secured some good commercial terms to make the decision easier.
How disruptive, in real terms, could this event be for the wider industry?
Obviously being able to buy HBO without subscribing to a channel bundle is potentially disruptive but the impacts will take some time to be felt across the industry. It does apply further pressure to the channel bundling model in the US and we expect to see the emergence of slimmer bundles, containing fewer channels, as a result in the short term. We don’t anticipate widespread moves towards enabling the audience to buy individual channels on an a la carte basis in the near future. We do however see significant growth (albeit from very low volumes) in OTA antenna sales as some households opt for a combination of OTT subscriptions – WWE Network, HBO Now, one of the sports SVOD services for example – and OTA access to receive the broadcast networks (ABC, CBS, Fox, NBC).
However all pay-TV providers who currently distribute HBO are able to sell HBO Now (alongside Apple) and we expect to see them doing this in bundles with broadband access, in fact Cablevision announced that they will be doing just this.
If you had to guess at people likely to follow suit, who do you think this will be and why?
Going directly to the audience is tough: channels work with pay-TV operators because they are good at building subscribers, marketing, billing, customer support and a host of other relatively unexciting but necessary functions which most broadcasters simply do not have the expertise to do themselves. Building an OTT audience is very tough, the audience is promiscuous and isn’t willing to pay a lot of money (most of the time, not any) and there is a lot of very aggressive competition. So you have to have unique content (and hope it’s not too easily available from a pirate) which is shows like Game of Thrones, Mad Men, Walking Dead and, of course, sport. Without a strong brand, digital expertise and unique content it is very difficult to build a visual entertainment business online.