[opendtv] Re: Cablevision to offer HBO Now streaming service - MarketWatch

  • From: Craig Birkmaier <craig@xxxxxxxxxxxxx>
  • To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
  • Date: Tue, 17 Mar 2015 22:39:24 -0400

On Mar 17, 2015, at 6:24 PM, Manfredi, Albert E <albert.e.manfredi@xxxxxxxxxx> 
wrote:
> 
> In this article, there is no hint that any previous MVPD reluctance at 
> streaming a stand-alone HBO service had anything to do with existing contract 
> limitations. It says instead:
> 
> "Cablevision Systems Corp. became the first cable operator to agree to offer 
> HBO's new streaming service, HBO Now, to its broadband customers, the 
> companies announced Monday, signaling HBO's first success in convincing a 
> longtime partner that its new service won't be cannibalistic."

Do you think this new agreement is based on the same terms - including the 
revenue split - that HBO and Cablevision have for customers who subscribe via 
the MVPD service?

Not likely.

The Apple deal suggests that HBO is getting 70% of the revenue, not the 50/50 
split that was typical with MVPDs. It is highly likely that HBO will get 70% 
from Cablevision.

> Whether the service is "cannibalistic" to the walled garden service, or not, 
> this sort of agreement is now going to become a net neutrality mandate. This 
> is what I had thought the problem was all along, and this is another clear 
> demonstration of why we need some sort of net neutrality regulation.

What does Net Neutrality have to do with this?

Whether any MVPD decides to sell HBO subscriptions or not has nothing to do 
with net neutrality.

Do you think MVPDs that sell broadband will block the bits if a subscriber 
chooses to buy HBO Now from Apple and the other services that will sell HBO Now 
when the App,e exclusive is over? That would be a net neutrality issue, but 
nobody is that stupid.

They will do as Cablevision is doing and offer HBO (streaming and HBO Go) or 
HBO Now.
> 
> You'll note further down:
> 
> "Since HBO first announced its plans last October to offer its service for 
> the first time outside the pay-TV bundle, the company has emphasized that its 
> first choice was to do so in partnership with its longtime distribution 
> partners that are responsible for the vast majority of its revenue."
> 
> HBO acting timid. The facts are plain enough. If HBO subscriptions decline 
> sharply, and Netflix increase sharply, HBO has to do something even if it's 
> going to displease previous middlemen.

Big ifs. HBO and Netflix are very different services. 

HBO had no choice but to move from streaming to VOD, as that is what the market 
demands.  They have had a very successful run with the MVPDs, but linear 
streams are not the future. HBO has the upper hand in this; they have very 
popular content and no longer need to give the MVPDs exclusive rights.

 But this does not mean they are walking away from the MVPDs. If anything, I 
expect to see the MVPDs cut prices for the linear HBO service with HBO Go, as 
they have both the margins and the incentive to do so. 
> 
> 
> Here, it's a new middleman, Apple, trying to wall up its own online TV 
> service. This time, walls not based on geographic concerns, but rather on 
> user hardware ("... and would be available on Apple devices such as the Apple 
> TV, they said."). Another unnecessary set of walls, in the Internet era. A 
> new attempt at this sort of thing, after failing to find a role in the 
> existing walled garden model (with the X1 STB for Comcast).

Kudos to Apple. 

They have the leverage to do this with a huge, very satisfied customer base - 
remember, it's not just Apple TV, it's ALSO hundreds of millions of iPhones and 
iPads. And ore than 400,000 million customer credit cards in the ecosystem.

Sony is playing the same game with PlayStation Vue.
> 
> Aren't we all lucky that radio, TV, and btw also the Internet, did not 
> initially evolve this way? I wonder how these services ever dared to strike 
> out on their own?

It's not how they started. It's where they are going. There are Many, many 
examples of industries that gave stuff away to get people hooked.


Regards
Craig 
 
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