Game of Thrones
Game of Thrones

Keeping up with the Starks, Lannisters and Targaryens is easy with HBOGO. Which is good for you and HBO too.

In Time Warner’s recent earnings it was reported that HBO saw continued growth of subscriber numbers and CEO Jeff Bewkes commented that he didn’t see any reason to change the company’s primary revenue model of bundling the service with pay television providers. Many were disappointed, as they would like HBO to be freed of the tyranny of the bundle, so that they could subscribe directly to the service.

I don’t think people really understand the money at stake here.

Allowing customers to buy the app directly would seriously cripple the bundle model and deprive Time Warner of a revenue source that has been sterling for the company. But the company was smart enough to understand the usage trends and built the HBO GO app for smart televisions, tablets and phones. I’m sure they were hearing strong demand from their subscribers on the subject.

As Jenna Wortham reported last April, there’s a workaround to get the service. Share the account. That’s right, more than one person can watch HBO GO at the same time, as long as they have a legit username and password. So your  friend can slip you the credentials, and voila! All the Game Of Thrones you want. Jenna talked to an HBO exec who mentioned he didn’t think it sharing accounts was a problem (for the record: it’s illegal to share credentials in many states and violates the end user agreement that governs the app).

From my experience at Rhapsody, content owners are extremely worried about shared accounts. The working theory is the dorm floor problem: one person subscribers and everyone on the dorm floor uses it. How much this goes on is questionable. What isn’t questionable is that customers hate one account, one stream. We could only allow for a single stream on all of our products, regardless of what the customer paid.

Stream Finder

Here’s what I think is going on. HBO knows what’s happening with multiple streams on an account. And they don’t care. In fact they are using it as a rear-guard defense for the day when the bundle goes belly up. Because they’ve produced most of the content on the app (it’s easy to forget the company started by offering second run movies and not the producer of must-see series), Because they’ve produced so many of their own series, HBO has much more latitude with what they can do with the catalog. So while other competitors may have to limit access due to licensing agreements, HBO allows some sharing (I hit a roadblock after starting three streams). It leads to fewer customer problems, but might it also be building their next generation of subscribers?

HBO is probably just as worried as any other content creator that one day the Comcasts or DirecTVs of the world won’t be able to send them a bankload of cash for their series and movies, as people cut the cord. It’s also clear that there is unmet demand for people who just want to pay for the service. But probably not enough to make up the innumerable Brinks trucks of money carriers provide. Until that day, HBO is being lenient because they want everyone to get addicted to using the app so that they can’t live without it. And the day they pull the trigger on direct to consumer sales for something like $30 a month, those people will sign up faster than you can say, “Red Wedding.”

Which brings me to an advantage that can’t be understated: the water cooler effect (which could also go by its other the name–Twitter). The more people who watch a show, the more they are going to talk about it. And the more people talk about it, the more buzz the show creates, making it required viewing. So by being looser with streaming rules HBO is building stronger social buzz around the show. I don’t have data to support it, but the Game Of Thrones (don’t tell me, i’m still behind) last couple shows in the previous season seemed to be so much bigger than it had in the past, which led me to think that more than their subscriber base watched it. Could that have been the HBO GO effect?

Maybe we should think of HBO GO as really cool club. As long you know the one person who can get past the bouncer, you’re all good.

More Single Stream Fun

NYT ($$$): No TV? No Subscription? No Problem

GigaOm: Time Warner Next to Embrace Cheap HBO Bundle

WSJ ($$$): HBO More Profitable Than Netflix But Slower Growing

Engadget: Time Warner Making Bank On HBO

Forbes: Is It Time For HBO to Sell Direct To Consumers

SocialBakers: How Game Of Thrones Conquered Social

Smart People to Follow On The Topic

Jenna Wortham

Robert Tercek

Jason Hirschorn

David Carr

Om Malik

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Category

HBO, HBOGO, marketing, pay television, subscription services

Tags

, ,