HBO and cutting the cord
By Michael Mealling
HBO is part of a “week of free” on most cable providers so I was able to watch the first episode of season three of Game of Thrones. We don't have HBO because I really don't need more TV to watch. But I'll make an exception for Game of Thrones.
So yes, that means I have to wait until next year to see the next episode. A few years ago I did some work for a cable company and learned from the inside that the greatest fear is becoming “a big, dumb pipe”. Since HBO is part of the Time Warner family of companies you can see how it is intimately tied to the cable industry.
If HBO was to start selling its content on a per-episode basis via iTunes or online subscriptions to HBOGo, it would enable people to cut the cord. From the perspective of the Time Warner executives that run HBO, it is entirely reasonable to assume that people are being held back from cutting the cord because of HBO (for now). This means that not only are they keeping their HBO subscription, but that the customers are also likely paying Time Warner indirectly via CNN, Cartoon Network, and all of Time Warner’s other subsidiaries. That’s something the company — financially speaking — shouldn't mess with.
The risk that HBO and Time Warner are running is that they can time the switch well enough to hold off competitors and that they can replace the current model with something that works as well as what they are currently doing.
What should HBO and Time Warner be looking for to pull the trigger? What would their model look like on the other side?
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