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| HBO is launching a stand-alone streaming service in 2015 | HBO is launching a stand-alone streaming service in 2015 |
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| HBO plans will launch a stand-alone online service in 2015 that doesn’t require consumers to also have a cable or satellite subscription, chief executive Richard Plepler said Wednesday. | HBO plans will launch a stand-alone online service in 2015 that doesn’t require consumers to also have a cable or satellite subscription, chief executive Richard Plepler said Wednesday. |
| The plans will create a dramatic shift in the television industry that has long benefited from forcing ever-growing bundles of channels on consumers, who often only regularly view a fraction of the programs being offered. | The plans will create a dramatic shift in the television industry that has long benefited from forcing ever-growing bundles of channels on consumers, who often only regularly view a fraction of the programs being offered. |
| HBO is one of the most valuable channels in cable and satellite packages, but the firm has long felt that its cable and satellite distribution partners haven’t given it a big enough cut of the cable industry’s highly profitable paid television subscriptions. New competition from Netflix and other digital entertainment platforms have put pressure on the cable model. But many consumers have been willing to stick with cable subscriptions to watch live sports on ESPN, for instance, and premium content on HBO. | HBO is one of the most valuable channels in cable and satellite packages, but the firm has long felt that its cable and satellite distribution partners haven’t given it a big enough cut of the cable industry’s highly profitable paid television subscriptions. New competition from Netflix and other digital entertainment platforms have put pressure on the cable model. But many consumers have been willing to stick with cable subscriptions to watch live sports on ESPN, for instance, and premium content on HBO. |
| “In 2015, we will be beyond the wall and launch a stand alone over-the-top service that will have the potential to produce hundreds of millions of dollars of additional revenues,” Plepler said at parent company Time Warner’s Investor Day meeting in New York. “And international opportunities can be just as large, if not larger. We will use all means at our disposal to go after it.” | “In 2015, we will be beyond the wall and launch a stand alone over-the-top service that will have the potential to produce hundreds of millions of dollars of additional revenues,” Plepler said at parent company Time Warner’s Investor Day meeting in New York. “And international opportunities can be just as large, if not larger. We will use all means at our disposal to go after it.” |
| Plepler didn’t provide details on the digital plans, but said the company will start off selling a stand alone service in the United States and two countries before expanding to all of the countries it current serves. | Plepler didn’t provide details on the digital plans, but said the company will start off selling a stand alone service in the United States and two countries before expanding to all of the countries it current serves. |
| HBO, which made $4.9 billion in revenues last year, has been one of the fastest-growing units of Time Warner and is largely seen as a lynchpin to the cable model, along with ESPN. So far this year, HBO has added more than 2 million subscribers but it sees a limit to how much it can grow through cable subscriptions. | HBO, which made $4.9 billion in revenues last year, has been one of the fastest-growing units of Time Warner and is largely seen as a lynchpin to the cable model, along with ESPN. So far this year, HBO has added more than 2 million subscribers but it sees a limit to how much it can grow through cable subscriptions. |
| “There are 10 million broadband-only homes in the U.S. That number is expected to grow,” Pepler said. “It’s a large and growing opportunity. It’s time to remove the barriers to those that want HBO.” In all, he said 80 million U.S. homes don’t have HBO — the company’s new target for growth. He said HBO will work with current partners and with new partners on the stand-alone Internet service. | “There are 10 million broadband-only homes in the U.S. That number is expected to grow,” Pepler said. “It’s a large and growing opportunity. It’s time to remove the barriers to those that want HBO.” In all, he said 80 million U.S. homes don’t have HBO — the company’s new target for growth. He said HBO will work with current partners and with new partners on the stand-alone Internet service. |
| The announcement comes amid major restructuring at Time Warner, which has shed Time Inc. and dramatically cut staff in its Turner Broadcasting unit. Earlier this year, the company rebuffed a near $80 billion bid by 21st Century Fox. At its Wednesday day-long meeting with investors, top executives emphasized the company’s renewed focus on core television and movie content. Time Warner chief executive Jeff Bewkes told investors and analysts at the meeting the company was poised to double earnings to $8 per share by 2018. | The announcement comes amid major restructuring at Time Warner, which has shed Time Inc. and dramatically cut staff in its Turner Broadcasting unit. Earlier this year, the company rebuffed a near $80 billion bid by 21st Century Fox. At its Wednesday day-long meeting with investors, top executives emphasized the company’s renewed focus on core television and movie content. Time Warner chief executive Jeff Bewkes told investors and analysts at the meeting the company was poised to double earnings to $8 per share by 2018. |
| The company’s plans for HBO mark a dramatic turn for Time Warner, which has been a leading proponent of keeping online access to its video content behind the television pay wall. Cable industry leaders in 2009 committed to a business model known as “TV Everywhere” that ensured the most popular programs would first be released for cable subscribers. | |
| Some consumers may be excited at the prospect of paying separately for HBO without a cable subscription, but if the online subscription is priced above $20, consumers may find themselves cobbling together online subscriptions that, along with broadband Internet service, compare to the cost of cable. | |
| And whatever HBO does, the cable bundle is probably not going anywhere anytime soon. The most popular content on TV — cable news and live sports — is still committed for years to cable television. Time Warner’s Turner Broadcasting and ESPN last week agreed to a nine-year $2.6 billion contract for NBA games. |