The Math Says HBO Shouldn't Go Direct, But They Left Innovation Out Of The Equation

from the take-it-to-the-bank dept

There's been plenty of talk about HBO and its ongoing refusal to offer a standalone internet offering for its content (unless you happen to live in the lovely Nordic region). A few months ago, this discussion took something of a viral turn with the website TakeMyMoneyHBO.com, which tried to calculate how much people would pay for standalone internet/mobile access to HBO content -- which suggested people would be willing to pay an average of about $12 per month. Now, we can all take online internet surveys with a pretty big grain of salt, but there clearly is a lot of interest in people getting such a service. The straight math says that at $12, it would be a good deal for HBO, which is rumored to actually get about $7 or $8 per subscriber via cable and satellite. But... as Ryan Lawler at TechCrunch wrote at the time, it's not that straightforward, and you can show how the math doesn't quite add up:
More importantly, it wouldn’t include the cost of sales, marketing, and support — and this is where HBO would really get screwed. Going direct to online customers by pitching HBO GO over-the-top would mean losing the support of its cable, satellite, and IPTV distributors. And since the Comcasts and the Time Warner Cables of the world are the top marketing channel for premium networks like HBO, it would be nearly impossible for HBO to make up for the loss of the cable provider’s marketing team or promotions.

Think about it: Every time someone signs up for cable or satellite service, one of the inevitable perks is a free six- or 12-month subscription to HBO. And those free subscriptions are rarely, if ever, cancelled once the trial period ends.
Lawler insists the math doesn't add up because without that marketing push, the number of subscribers would be much lower. HBO claimed that Lawler's math was right. And it may be. For now. But that's really dangerous thinking.

We've pointed out before that it's quite tempting for legacy players to think that they can wait out disruptive innovation. They talk about how the new products and services aren't good enough or don't make enough money to bother getting into that space. Often they'll directly talk about how the new services don't make the same amount of revenue as the old ones (or they'll make some crack about "dollars into dimes.") And, of course, they insist that when the money is there they'll make the switch. But, if you understand anything about the history of disruptive innovation, you know that if you wait until that point, you're already behind. Someone else has already taken over that market, and your "switch" is often seen as way too little, way too late (not to mention that it's often accompanied by massive bungling, as the slow entrance also means not really understanding enough about how that market works, while all your competitors spent all that time perfecting their solutions).

MG Siegler has a great post talking about this very concept as it relates to HBO, responding to Lawler (again) and his recent interview of an HBO exec during a panel at TechCrunch Disrupt. Once again, HBO insisted that Lawler was right and that "the math didn't make sense." But Siegler points out, correctly, that innovation beats math every single time. Siegler basically highlights the key point of Clayton Christensen's Innovator's Dilemma: it's really really tough for legacy players to eat their own cash cows and bet on something new. He points to another excellent article, by Farhad Manjoo at Slate, about how Apple actually does this really well, specifically how it totally cannibalized its cash-cow iPods with the iPhone:
Put it all together and you get remarkable story about a device that, under the normal rules of business, should not have been invented. Given the popularity of the iPod and its centrality to Apple’s bottom line, Apple should have been the last company on the planet to try to build something whose explicit purpose was to kill music players. Yet Apple’s inner circle knew that one day, a phone maker would solve the interface problem, creating a universal device that could make calls, play music and videos, and do everything else, too—a device that would eat the iPod’s lunch. Apple’s only chance at staving off that future was to invent the iPod killer itself. More than this simple business calculation, though, Apple’s brass saw the phone as an opportunity for real innovation.
That, in a nuthsell, is what most companies fail to do. It's why Clayton Christensen's book sells so well, even though very, very few companies have any idea how to do what Apple did and "eat its own." But the point is there. If you focus on "the math," you're going to miss the market and be way, way too late. Back to Siegler:
Moore's statement about HBO is correct. The math is not in favor of selling HBO access directly to consumers. But if we're just thinking about this from a pure product perspective, I don’t think anyone would disagree that this is what we all want. HBO is choosing not to build the service we will love, they're choosing the short-term money. The safe bet. The math.

But if they don’t diverge from this path, it will lead to their demise. Innovation always beats math, eventually. That, you can take to the bank.
He's right. And the more you look at the economics of innovation, the easier it is to understand why innovation always beats math. It's because "the math" that people do is of a static world, for the most part. They use past performance and metrics built on a different market. They don't understand how quickly a new market grows, and how much larger its overall potential is. And that's because we have difficulty in mentally dealing with non-zero sum markets, preferring to think that it's a one-for-one switch. But, it's not. Innovation expands markets in new and unexpected ways, often quite rapidly (though also, deceptively slowly at first, because the growth is often in a tangential market that people don't even recognize).

So they come up with spreadsheets and "models" that try to predict when the math says it's time to switch. And all of that time they're not innovating. But since the disruption is brewing in a much faster manner, and in a different spot than they really think it is, the time to switch is usually as soon as you realize the innovation is happening, not when the spreadsheet tells you to. It's not just about choosing "the safe bet" vs "the service we love." It's about how disruptive innovation guarantees that those who don't build for the markets of tomorrow, don't really have much of a market tomorrow.


Reader Comments (rss)

(Flattened / Threaded)

  •  
    icon
    Ninja (profile), Sep 12th, 2012 @ 9:32am

    Maybe they could just offer a lower fee for those with a cable subscription and launch the independent service anyway? It's not like Apple stopped selling iPods, they just expanded the offerings to include the iPhone. I might not want the phone after all. Maybe in the end their direct offer will outnumber the legacy system.

    In the end it's the same with music and movies too. You can still sell the physical goods and people will buy them. But for God sake, go for newer and innovative solutions. Sometimes the investment needed for those new markets is just ZERO.

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      ChurchHatesTucker (profile), Sep 12th, 2012 @ 10:10am

      Re:

      The problem is that the lunch Apple ate was entirely its own. HBO is going to have to eat some of its providers' lunch as well. And right now they're the ones paying for lunch.

      They've got to get out ahead of this, though. Film makers are approaching the half million dollar mark on Kickstarter already. HBO has a finite amount of time to stay relevant.

       

      reply to this | link to this | view in chronology ]

      •  
        icon
        Ninja (profile), Sep 12th, 2012 @ 10:17am

        Re: Re:

        Maybe. I think cable can remain relevant if they add "do it yourself" channels where you choose what you want to watch. Not that hard. Then HBO could be one of these offerings along with the regular fixed schedule channels.

        Srsly, there are tons of possibilities if you actually embrace them.

         

        reply to this | link to this | view in chronology ]

        •  
          icon
          Cory of PC (profile), Sep 12th, 2012 @ 10:23am

          Re: Re: Re:

          Personally I would go with a "build your own" channel, but it's still the same idea, right?

           

          reply to this | link to this | view in chronology ]

          •  
            icon
            Ninja (profile), Sep 12th, 2012 @ 10:27am

            Re: Re: Re: Re:

            Yes, but why don't they offer such 'channels'? You could even group together stuff from, let's say, Fox, Axn, Space etc and the providers would receive money proportional to their popularity. Could be done, couldn't it?

             

            reply to this | link to this | view in chronology ]

            •  
              icon
              Cory of PC (profile), Sep 12th, 2012 @ 10:48am

              Re: Re: Re: Re: Re:

              Why can't it be done?

              Then again, I was thinking of putting in "package" to my comment, but left it out, but it still fits it. Part of the thinking reminds me of the favorite system that Dish has (I'm not familiar with the others out there) where you can group the channels that you watch and leave everything else out, but why do we have to pay for those extra channels? Let us make our channel package and then pay for what we get, not for what we don't need!

               

              reply to this | link to this | view in chronology ]

              •  
                icon
                Ninja (profile), Sep 12th, 2012 @ 10:52am

                Re: Re: Re: Re: Re: Re:

                No! I say in the same channel you can add stuff from any source. I also don't think there should be channel packages at all. You can still have regular channels (I'd rather watch Discovery randomly instead of choosing what to watch but with HBO it's not like that). Seems we agree with each other but are using different wording >.>

                 

                reply to this | link to this | view in chronology ]

                •  
                  icon
                  Cory of PC (profile), Sep 12th, 2012 @ 11:07am

                  Re: Re: Re: Re: Re: Re: Re:

                  Ooh... yeah, wording did play a factor in it. Maybe it was a good thing I removed "package" from my first comment. Still, it's a good idea and I do like to get some of the shows that I do like and watch those to catch up on what I am missing.

                  ... Again, why can't it be done?

                   

                  reply to this | link to this | view in chronology ]

                  •  
                    identicon
                    Anonymous Coward, Sep 13th, 2012 @ 1:50am

                    Re: Re: Re: Re: Re: Re: Re: Re:

                    basically? it comes down to the fact that the most popular channels aren't actually produced by the cable companies, but independant companies ( Discovery is produced by Discovery Networks) who are the ones who actually own the content, and choose what's shown. If they don't own a show, then they can't show it on a custom channel.

                     

                    reply to this | link to this | view in chronology ]

  •  
    icon
    sehlat (profile), Sep 12th, 2012 @ 9:37am

    Short Form

    Question: When do we lock the barn door.

    Answer: The math says wait.

    Followup Question: What's that cloud of dust way down the road?

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Sep 12th, 2012 @ 9:38am

    You can't go wrong focusing on your core competency, right???

     

    reply to this | link to this | view in chronology ]

  • This comment has been flagged by the community. Click here to show it
     
    identicon
    bob, Sep 12th, 2012 @ 9:42am

    Bah. Innovation as defined around here is pretty meh

    Innovation may be great, but this website has a very narrow definition of innovation: anything that makes life easier for Big Search to make money. Doing a good job with DRM takes lots of college degrees and knowledge of impossibly brilliant topics like encryption, but you wouldn't catch anyone around here praising that kind of innovation.

    Face it. Watching TV is pretty much a passive game. The only innovation that goes on is in delivering the product. As you point out, the cable companies do quite well with their inane subscription fees and crazy requirements to upgrade to watch the fancy content.

    If they're doing so well, why would they want to choose the "innovation" on YouTube? That just seems to be a collection of mildly amusing cat videos shot with someone's cell phone. Only in your book is poor video quality and zero editing considered "innovation".

    The fact is that it takes cash to do real video innovation like 3D movies, multichannel sound, etc. That's not going to come from some low-rent streaming site or the wide-open Internet.

    I like the cat videos. I watch them occasionally. I even chuckle. But I don't see that as innovation. If I want innovation, I pay big bucks to HBO for "Game of Thrones" because I know that all of those innovative sets and things require cash.

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      Leigh Beadon (profile), Sep 12th, 2012 @ 9:44am

      Re: Bah. Innovation as defined around here is pretty meh

      Doing a good job with DRM takes lots of college degrees and knowledge of impossibly brilliant topics like encryption, but you wouldn't catch anyone around here praising that kind of innovation.

      Ok. If anyone ever does a good job and makes effective DRM that isn't cracked within a few days, we'll be sure to praise them...

      That just seems to be a collection of mildly amusing cat videos shot with someone's cell phone. Only in your book is poor video quality and zero editing considered "innovation".

      Sounds like you haven't been on YouTube in 5+ years. Time to check it out again, bob.

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        bob, Sep 12th, 2012 @ 10:53am

        Re: Re: Bah. Innovation as defined around here is pretty meh

        It doesn't have to be 100% effective. Apple iTunes built itself with DRM and they succeeded at pushing people to making the legit decision to actually pay. They've since claimed that they're not adding DRM to everything, but I think it's because the complexity of the file system is good enough to deter most people from copying.

        DRM doesn't need to be perfect. It just needs to be enough of an impediment to help encourage people be honest. Door locks aren't perfect but they help keep honest people honest.

        So let's hear some praise for the systems like the one that NBC deployed to make sure that people pay into the cable TV system. It worked well enough.

        As for your crack about YouTube, I continue to stumble upon plenty of pirated music mashed up with pirated still images. It's nice that they're licensing some legit content but that only makes my point again. It's only a matter of time until they start charging for subscriptions. Advertising doesn't pay very well and so the stars on YouTube are things like Annoying Orange. The production budget on that is something like five or six dollars for new fruit.

         

        reply to this | link to this | view in chronology ]

        •  
          icon
          Cory of PC (profile), Sep 12th, 2012 @ 11:02am

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          Another reason why I will never use iTunes.

          How do doors make people honest? Aren't the TPP negotiations going on behind closed doors and not once are we given a straight, honest answer about what's going on? I don't think DRM is good to build honesty.

          Yay... and I'm doing that as flat as humanly possible.

          ... Though I have no opinion on the Annoying Orange, they do have a deal with Cartoon Network so money won't be an issue.

           

          reply to this | link to this | view in chronology ]

        •  
          icon
          DH's Love Child (profile), Sep 12th, 2012 @ 11:07am

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          "It doesn't have to be 100% effective. Apple iTunes built itself with DRM and they succeeded at pushing people to making the legit decision to actually pay. They've since claimed that they're not adding DRM to everything, but I think it's because the complexity of the file system is good enough to deter most people from copying. "

          Apple didn't build itself with DRM. They had to have DRM laced music files in order to get the catalogs from the music publishers. They succeeded in spit of DRM not because of it. They were vehemently opposed to DRM and pushed back against the RIAA idiots to get it removed from the entire library.

          You should at least get your facts straight if you're going to argue them.

           

          reply to this | link to this | view in chronology ]

        •  
          icon
          Ninja (profile), Sep 12th, 2012 @ 11:44am

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          DRM doesn't need to be perfect. It just needs to be enough of an impediment to help encourage people be honest.

          Except it is one of the reasons that push people towards piracy. I've downloaded a DRM free copy of all my legit content or circumvented using open source software.

          So let's hear some praise for the systems like the one that NBC deployed to make sure that people pay into the cable TV system. It worked well enough.

          And then disruption came and it's failing. Thank God because NBC was able to force ppl into pay due to a Government granted monopoly and we are seeing this monopoly fall in pieces.

          As for your crack about YouTube, I continue to stumble upon plenty of pirated music mashed up with pirated still images.

          Fair use as far as I'm concerned. Sure there are the ones that just lump a bunch of images together to actually make the music available but.. So what? The music is being spread around, it's proven that youngsters now discover most of their songs and bands via Youtube (they use it much like radio). So the artists should be DEAD worried if they aren't on lousy slideshows all around youtube.

           

          reply to this | link to this | view in chronology ]

        •  
          identicon
          Ruben, Sep 12th, 2012 @ 12:10pm

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          You truly have no grasp of technology, do you?

          Either that, or you do and you're scared to death of it.

           

          reply to this | link to this | view in chronology ]

    •  
      icon
      Lowestofthekeys (profile), Sep 12th, 2012 @ 9:48am

      Re: Bah. Innovation as defined around here is pretty meh

      "Doing a good job with DRM takes lots of college degrees and knowledge of impossibly brilliant topics like encryption, but you wouldn't catch anyone around here praising that kind of innovation."

      Hey bob, did you know that designing ads for spamvertising takes a pretty deep know-how of color theory, design hierarchy and psychology? Does that mean spam is innovative?

      "If they're doing so well, why would they want to choose the "innovation" of Netflix?"

      FTFY

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      Parts Per Million Man, Sep 12th, 2012 @ 9:54am

      Re: Bah. Innovation as defined around here is pretty meh

      "The fact is that it takes cash to do real video innovation like 3D movies"

      Innovation? No, I believe the word you're looking for is "gimmick". 3D does nothing to improve the story nor the acting.

       

      reply to this | link to this | view in chronology ]

      •  
        icon
        sehlat (profile), Sep 12th, 2012 @ 10:18am

        Re: Re: Bah. Innovation as defined around here is pretty meh

        It doesn't improve the movie, either, as a couple of migraines induced me to stop even thinking about going to anything in 3D.

         

        reply to this | link to this | view in chronology ]

    •  
      icon
      AdamR (profile), Sep 12th, 2012 @ 9:55am

      Re: Bah. Innovation as defined around here is pretty meh

      " I pay big bucks to HBO for "Game of Thrones" because I know that all of those innovative sets and things require cash."

      Yup the great wall of the North they built must have cost billions to build! Maybe even more considering global warming and stuff!

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      Argonel (profile), Sep 12th, 2012 @ 9:55am

      Re: Bah. Innovation as defined around here is pretty meh

      Yes becasue using a cell phone for filming is solely the domain of youtube. You might want to check out a movie that was in theatres recently, called "The Avengers" I hear it had a couple dollar budget and earned a few sheckels. They publicly stated that some scenes were filmed with an iPhone.

      They aren't a replacement yet, but they are good enough to be used in some situations.

      Or if you are interested in long form content you might look at the Tromafilms channel on youtube. or look at the 3D channel on youtube, or look at ultra-high res videos (assuming you have a display capable of showing 4K content.) Some things will succeed, others will fail. If you don't try new things it is inevitable that you will eventually fail.

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        Anonymous Coward, Sep 15th, 2012 @ 8:00pm

        Re: Re: Bah. Innovation as defined around here is pretty meh

        Sorry, but a quick Google (I wanted to see which shots in The Avengers were shot on an iPhone) showed very quickly that the second-unit director walked back his quoted statement, and confirmed that none of it was shot on an iPhone. It was a misquote caused by an overzealous interviewer.

         

        reply to this | link to this | view in chronology ]

    •  
      icon
      techflaws (profile), Sep 12th, 2012 @ 10:29am

      Re: Bah. Innovation as defined around here is pretty meh

      Doing a good job with DRM takes lots of college degrees and knowledge of impossibly brilliant topics like encryption, but you wouldn't catch anyone around here praising that kind of innovation.

      Obviously, cause DRM offers no benefit whatsoever to the customer.

       

      reply to this | link to this | view in chronology ]

      • This comment has been flagged by the community. Click here to show it
         
        identicon
        bob, Sep 12th, 2012 @ 10:47am

        Re: Re: Bah. Innovation as defined around here is pretty meh

        Wrong. If I'm a customer, I don't want to be only sucker actually paying for something while I everyone else is getting a free ride by downloading it and sharing it. I want all of the users to pay their fair share. That's sharing in my book. DRM helps with that.

         

        reply to this | link to this | view in chronology ]

        •  
          icon
          Ninja (profile), Sep 12th, 2012 @ 10:50am

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          Thank God you are a species facing extinction ;)

           

          reply to this | link to this | view in chronology ]

        •  
          identicon
          Parts Per Million Man, Sep 12th, 2012 @ 10:50am

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          "I want all of the users to pay their fair share. That's sharing in my book."

          Wow. I've never seen anyone define NOT sharing as sharing. This may have to become the new definition of "chutzpah".

           

          reply to this | link to this | view in chronology ]

          •  
            icon
            Lowestofthekeys (profile), Sep 12th, 2012 @ 11:04am

            Re: Re: Re: Re: Bah. Innovation as defined around here is pretty meh

            You sir have never met bob.

            Strongest reality distortion field in the world.

             

            reply to this | link to this | view in chronology ]

          •  
            icon
            PaulT (profile), Sep 13th, 2012 @ 1:34am

            Re: Re: Re: Re: Bah. Innovation as defined around here is pretty meh

            bob uses his own dictionary. Apparently, "sharing" is the new word he's using a definition of that nobody else on the planet uses, to join his "paywall" and other rants.

            He's either invented his own reality or his own language, and seems incapable of communicating on the same level as everybody else.

             

            reply to this | link to this | view in chronology ]

        •  
          icon
          Cory of PC (profile), Sep 12th, 2012 @ 10:55am

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          ... I think you were replying to sarcasm, bob.

          Also, I can't tell what you're saying in your second sentence. You're missing a few words, but then it still won't make any sense whatsoever.

           

          reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Sep 12th, 2012 @ 10:58am

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          Except that DRM accomplishes the exact opposite since the pirates have already stripped it and are free to enjoy their content without unskippable FBI warnings, region locks, always-on internet requirements, or device lock-in.

          Including DRM with your product is forcing your customers to purchase malware and making it easy for the pirates to offer a free product that is superior in every way.

           

          reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Sep 12th, 2012 @ 11:21am

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          No, bob, you're already a sucker by paying for DRM. You are paying money to get the poorer experience. It's like giving to a charity that kicks you in the face, except that for some reason, you enjoy it.

          I don't need to pirate for entertainment. Watching you squirm as a John-Steele-supporting, library-hating shitstain is plenty entertaining. You still haven't told us what your "product" is, bob! How can we avoid pirating (read: perusing) it if we don't even know what it is? But hey - since you support John Steele I think we can hazard a few good guesses.

           

          reply to this | link to this | view in chronology ]

        •  
          icon
          techflaws (profile), Sep 12th, 2012 @ 10:20pm

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          Wrong.

          Indeed you are, bob. It's jut how you roll.

          If I'm a customer, I don't want to be only sucker actually paying for something while I everyone else is getting a free ride by downloading it and sharing it.

          So, you enjoying the media you paid for depends on whether everyone else paid too? Yeah, that makes sense.

          DRM helps with that.

          DRM that's been broken every time, that DRM? Man, it's just too easy to prove you wrong.

           

          reply to this | link to this | view in chronology ]

    •  
      icon
      Ninja (profile), Sep 12th, 2012 @ 10:48am

      Re: Bah. Innovation as defined around here is pretty meh

      Doing a good job with DRM takes lots of college degrees and knowledge of impossibly brilliant topics like encryption, but you wouldn't catch anyone around here praising that kind of innovation.

      And yet the internet kids crack any DRM in days, DRM itself annoys legit consumers and those minds could be being used in useful creations. Why the hell would any1 prise something that takes value away from the product?

      Face it. Watching TV is pretty much a passive game.

      Yes and that's why most of my friends don't watch TV at all. But it can be active, there's enough technology to allow people to mount their own 'channels' the way they want.

      That just seems to be a collection of mildly amusing cat videos shot with someone's cell phone.

      If you search for cat videos on Youtube you'll obviously find cat videos. Try refining your terms. Also sometimes Youtube is about HOSTING the videos. Most videos I find come from outside sources that use Youtube as a platform.

      The fact is that it takes cash to do real video innovation like 3D movies, multichannel sound, etc.

      And those all came from outside the damned studios. Thank the tech companies for that.

      If I want innovation, I pay big bucks to HBO for "Game of Thrones" because I know that all of those innovative sets and things require cash.

      http://takemymoneyhbo.com/
      We want to pay, HBO doesn't want to provide us the service =)

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        bob, Sep 12th, 2012 @ 10:57am

        Re: Re: Bah. Innovation as defined around here is pretty meh

        I understand why people want to unbundle HBO. It only makes sense. The trouble is that everyone wants to unbundle because everyone only watches a few channels. The trouble is that if everyone unbundles, the total revenue for the entire industry will shrivel.

        The problem is that everyone is freeloading off of everyone else. The fees for sports are subsidized by the fees from the folks who watch the macrame channel. The fees for the macrame channel are subsidized by those who watch sports.

        The industry desperately needs to collect $100+ from each house on average or it will go into a big collapse. So that's why they want to insist that you buy cable. They don't want to charge you $100 for the HBO alone.

         

        reply to this | link to this | view in chronology ]

        •  
          icon
          Lowestofthekeys (profile), Sep 12th, 2012 @ 11:06am

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          "The industry desperately needs to collect $100+ from each house on average or it will go into a big collapse. So that's why they want to insist that you buy cable."

          You know what caused that? Lack of foresight.

          It's their own fault.

           

          reply to this | link to this | view in chronology ]

        •  
          icon
          Ninja (profile), Sep 12th, 2012 @ 11:34am

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          I couldn't care less what the industry needs. I don't want to pay for all of it but I'll gladly cherry pick and pay more than they get from their cable partners. If the industry falls, well, more space for new and better entrants. Shit happens.

          And you keep babbling "freeload" like a parrot when we are precisely discussing I want to pay but HBO doesn't let me. Reminds of those scratched vinyls...

           

          reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Sep 12th, 2012 @ 12:36pm

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          The industry desperately needs to collect $100+ from each house on average or it will go into a big collapse. So that's why they want to insist that you buy cable. They don't want to charge you $100 for the HBO alone.

          Sounds like we have a product which is severely overvalued, and is being propped up by extortionist business practices.

          There are way too many cable tv channels, and way, way too little worthwhile programming.

           

          reply to this | link to this | view in chronology ]

        •  
          identicon
          Anonymous Coward, Sep 15th, 2012 @ 8:54pm

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          There is a great, big, huge lot of money, buckets of it to roll around in, for the lucky few at the tippy-top of the content-maker and -provider pyramids. I would prefer that more of that money stay in my pocket and less of it be handed over to these guys to spend on hookers, blow, and buying legislation that puts even more money in their pockets from our politicians. These people have gotten very used to being filthy rich, but that gravy train is pulling into the station any minute now. They're panicking, insisting that what worked so well for them yesterday needs to work forever and ever, and I do not feel sorry for them. The industry's revenues need to shrivel.

           

          reply to this | link to this | view in chronology ]

          •  
            identicon
            Doremi, Dec 31st, 2013 @ 9:35am

            Re: Re: Re: Re: Bah. Innovation as defined around here is pretty meh

            It irks me when techcrunch groupies start talking tv as if they knew the industry inside out.

            IF hbo made more money on direct to consumer online sales (per show) than it does selling its series to international channels, it would do so. You can NOT have worldwide VOD and intl sales.

            Secondly, if it unbundles from comcast, who pays for the new pilots and series? I see you dishing a couple bucks for game of thrones - but no one has mentioned n1 ladies detective agency, bored to death, etc. And the upcoming pilots? Think HBO on its own can sustain the millions of dollars in deficit finance before nabbing 2.99 from you?

            They should be thinking about innovation. But don't pretend you know the answer.

             

            reply to this | link to this | view in chronology ]

            •  
              icon
              PaulT (profile), Jan 3rd, 2014 @ 1:51am

              Re: Re: Re: Re: Re: Bah. Innovation as defined around here is pretty meh

              "It irks me when techcrunch groupies start talking tv as if they knew the industry inside out."

              Not enough to understand what they're trying to say rather than finding a pithy name to call them in order to reject their opinions.

              But, hey, these are only the people don't/can't currently subscribe to HBO that they're supposed to be trying to get to subscribe. Why should their opinion matter, huh? Why should "I don't subscribe to HBO and this is why" be a valid statement, as long as you can reject people for reading a site they possibly don't visit (I know I don't).

              "but no one has mentioned n1 ladies detective agency, bored to death, etc. "

              Well, I've certainly never heard of either of these shows. Should I have done?

              "Think HBO on its own can sustain the millions of dollars in deficit finance before nabbing 2.99 from you?"

              Many other companies do, utilising various types of business model that don't depend on locking out a large potential audience. Why can't HBO?

               

              reply to this | link to this | view in chronology ]

    •  
      identicon
      Clear, Sep 12th, 2012 @ 11:11am

      Re: Bah. Innovation as defined around here is pretty meh

      I think you missed the point here. The innovative alternative is not "YouTube". The innovative alternative is you take HBO, in all its high quality goodness, and put it online for a fee. A production company selling directly to the market.
      Let that sink in. The people who make the shows and buy the movie rights selling directly to their customers and completely cutting out the middleman. Now they have a symbiotic relationship but even the major networks have cut out cable providers and introduced things like Hulu.
      Its not even a very big innovation, for instance Netflix is experimenting with inhouse productions, but the fact that HBO is so popular, and is a big part of why people get an expensive cable package they don't want, means they can charge subscribers, or try out advertising themselves, or sell on iTunes, and sell directly to the consumer with no one to piss off. I would buy HBO, but there is no way in hell I am going to get cable for it, and I know I'm not alone. So people tend to pirate, because that is far easier than a whole cable thing, but not as easy as a subscription with guaranteed quality. They get more money, we pay less, and the dirty cable companies get pushed out.

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      cm6029 (profile), Sep 12th, 2012 @ 11:13am

      Re: Bah. Innovation as defined around here is pretty meh

      The 'innovation' you refer to includes (by my count) at least 3 'reality' shows about towing companies, 3 about pawn brokers, and about 9 billion about housewives that make me want to puke. Sorry, I think the innovation is in delivery to my platform of choice, and the rare but exceptional new premise, like 'Breaking Bad' or 'Mad Men', but even for those, the plot gets stale after 5 seasons.

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      JEDIDIAH, Sep 12th, 2012 @ 1:23pm

      Re: Bah. Innovation as defined around here is pretty meh

      Cable TV is doing OK for now. However, the tipping point has been reached already. People have gotten fed up and there is a glut of media out there. It's cheap even if you aren't a pirate. Decades worth of content are more accessible then ever from more sources than ever. The glut is driving down prices so that you don't even need to pirate anymore.

      Never mind the pirates, Big Content has to worry about it's own back catalog available for purchase in Walmart at cut throat prices.

      The real question is who is going to provide the better mouse trap.

      Incumbent land line monopolies are dinosaurs that don't even notice the asteroid burning through the sky.

      If you think 3D is an "innovation" then you're just another one of the dinosaurs.

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      jupiterkansas (profile), Sep 12th, 2012 @ 1:33pm

      Re: Bah. Innovation as defined around here is pretty meh

      1. You have to mention "big search" and Youtube don't you? Even though they have absolutely nothing to do with this post or the HBO proposal. In fact, this proposal is an excellent way to bypass "big search" and Youtube and eliminate piracy. We get it - you hate Google. A Google maps van ran over your puppy. Why do you constantly take it out on TechDirt?

      2. Spending lots of money on something doesn't increase it's quality. 3D doesn't increase quality. Multi-channel sound doesn't increase quality. $200 million movies aren't better quality. The best movies I've seen in the last 10 years have been under $50 million, and many of them have been documentaries. The worst movies I've seen in the last 10 years have all cost more than $150 million to make. Apparently, you are in love with Hollywood's overpolished turds.

      3. I have watched three HBO series lately: The Pacific, John Adams, and Boardwalk Empire. How did I get them? My local library. Who needs piracy? Who needs cable? My taxes provide all the entertainment I need. Why don't you rant against "big libraries"?

      4. You must have an appalling ability to find quality original content on Youtube. It's out there, and it's more entertaining and informative than what Hollywood comes up with. Oh, and there's Vimeo too. It's not all about Google.

       

      reply to this | link to this | view in chronology ]

      •  
        identicon
        JEDIDIAH, Sep 12th, 2012 @ 8:29pm

        Re: Re: Bah. Innovation as defined around here is pretty meh

        I get my HBO fix either through Netflix or Target. It's much cheaper that way and I can handle the wait. While HBO does have some interesting original content, they aren't much of a movie channel anymore. Too few things are repeated far too often.

        Beyond the original stuff, they were better in the 70s.

        Between the various competing networks and the various exclusives you end up needing to buy it all to get it all and that ads up. I suspect that this same problem will plague streaming. (no service or app will have it all)

         

        reply to this | link to this | view in chronology ]

        •  
          icon
          jupiterkansas (profile), Sep 13th, 2012 @ 2:34pm

          Re: Re: Re: Bah. Innovation as defined around here is pretty meh

          What they don't seem to realize is there is always something else to watch. I've got enough films in my Netflix queue to entertain me for years.

          Making it hard to see your product just means I won't see your product.

           

          reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Sep 12th, 2012 @ 5:23pm

      Re: Bah. Innovation as defined around here is pretty meh

      Cable isn't innovative. Adding 3-D and multichannel sound, etcetera will not bring me back to cable. Adding options that require more and more expensive equipment doesn't help your market that much. I stream all of my content directly to my television, and I save over $100/mth doing it. HBO wants my money? They need to offer a standalone service that I can add to my Roku. That's it. But they won't, so they lose out among cablecutters.

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      Tim Griffiths (profile), Sep 13th, 2012 @ 4:50am

      Re: Bah. Innovation as defined around here is pretty meh

      I currently do half of my consuming of video media (this includes, tv and film) via youtube. And I do not mean I spend a stupid amount of time watching cat videos. Youtube is able to offer me high quality content on subjects I care about but which would never make it to TV.

      Let's take for example "Table Top" from the Geek and Sundry channel ( http://www.youtube.com/user/geekandsundry ) it's a studio produced show in an up to 1 hour format that is uploaded in 1080p hosted by Wil Wheaton in which he sits down and plays a different table top game each week with 4 guests. Those guests range from the head of Blizzard to writers artist and actors that I admire. It's funny, well produce, hosted by a guy I like that shows content I enjoy with people I'm interested in.

      Geek and Sundry is also currently doing "Written by a Kid" where they create short films based on a story told by a kid. These films are produce each week by a different and wide ranging set of talent and actors. It's also going to be home to the new season of The Guild that is a short form comedy show about an MMO guild that is as good or better than a lot of crappy sitcoms you'll find on TV.

      That's just one channel and there are any number of others offering content that is on a par or better with content on TV that would never have been greenlit for production on it.

      You want to talk about innovation and yet you simply dismiss the innovation that is coming out of the best of youtube because of the worst of it. If we apply the same logic medium in which you claim to see innovation you should judge the market in which that innovation is coming from by the lest innovative thing in it.

       

      reply to this | link to this | view in chronology ]

    •  
      icon
      Tim K (profile), Sep 13th, 2012 @ 6:08am

      Re: Bah. Innovation as defined around here is pretty meh

      That just seems to be a collection of mildly amusing cat videos shot with someone's cell phone.

      You fail ay using youtube, here's an awesome video related to GoT.

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Sep 15th, 2012 @ 10:26am

      Re: Bah. Innovation as defined around here is pretty meh

      You Tube was the innovation, not the cat videos

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Simon, Sep 12th, 2012 @ 9:43am

    No HBO for me then.

    I guess I got left behind by math.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Lowestofthekeys (profile), Sep 12th, 2012 @ 9:45am

    Apple also suffered pretty heavily in the first few years Itunes was released. Steve Jobs knew he was going to lose money, but he invested in the idea because it helped them move out the ipod.

    "Maybe they could just offer a lower fee for those with a cable subscription and launch the independent service anyway?"

    This.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    AdamR (profile), Sep 12th, 2012 @ 9:48am

    "Lawler insists the math doesn't add up because without that marketing push, the number of subscribers would be much lower. HBO claimed that Lawler's math was right."

    1. So every add I see for Game of Thrones or other HBO shows is paid for by the cable co.'s?

    2. At this point who hasn't heard of HBO?

    3. Cable Companies continue raising rates and charging for a everything little thing(like 2.50 per month per remote)and when difficult decision need to be made to save and few bucks HBO and other pay services go bye bye including Cable itself! So they might be helping in one end but totally screwing it up on the other!

    4. I might be willing to sign up for HBO GO standalone but somewhere between 5.00 to 9.00 per month tops. I see no real value of paying more when Amazon, Netflix provide more for less.

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      cm6029 (profile), Sep 12th, 2012 @ 11:25am

      Re:

      OK. But here's the thing: I am already watching about 5 to 10 times more on Netflix than on Comcast. When I do watch something on Comcast, its usually on-demand rather than the inconvenient fixed schedule. I have to imagine that I am not so different from most subscribers. Personally, I don't find HBO that compelling either, but I would bet that if they teamed up with, say, Netflix, and offered a premium version that included HBO content, they would capture a significant portion of that user-base without breaking a sweat. Just my 2 cents.

       

      reply to this | link to this | view in chronology ]

  •  
    icon
    Mesonoxian Eve (profile), Sep 12th, 2012 @ 9:49am

    "And those free subscriptions are rarely, if ever, cancelled once the trial period ends."
    This isn't true at all and I'm calling it out for its accuracy. Based on comments from cable subscribers who are hit with a shocking increase of the next month's cable bill after the free trial, you can bet more turn off the service than keep it.

    Because it's certainly not $12/mo, or the $7/$8 proposed per month fee would be.

    And you can bet people would definitely drop the more ridiculously over-priced cable version to help pay for the rest of the entertainment these industries artificially mark up in price but expect everyone to afford.

    Then again, the online version only fuels the next battle forthcoming when these industries do adapt: nickel and diming the hell out of every American with monthly subscriptions to 20,032 sites because each will host exclusive content.

    This stuff makes me sick thinking about it.

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      Chosen Reject (profile), Sep 12th, 2012 @ 4:15pm

      Re:

      I'm not sure it's all that inaccurate. My guess is that most people who sign up for the free trial subscription are people who want HBO in the first place. However, that simply leaves another problem with HBO's logic. If my supposition is true, then the cable company isn't doing any marketing or promoting for them, since the people who signed up already wanted it.

       

      reply to this | link to this | view in chronology ]

  •  
    icon
    Jay (profile), Sep 12th, 2012 @ 9:55am

    Is anyone else imagining Steve Jobs dressed as Mola Ram in the middle of a dark ritual deep underneath Apple's campus, tearing the heart of the iPod out in order to bring the iPhone to life? Okay, just me then.

    On a more serious note, I'm one of those people who only has the internet, iTunes, and a cell phone. I don't want a cable subscription to watch your show. I can watch the newest episode of Doctor Who the day after it airs, and that's a pretty good deal for me.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Sep 12th, 2012 @ 10:00am

    Actually, it sounds like they left out the kool-aid. That's what smart business people do, they don't buy the hype, the buy the bottom line.

    Still trying to figure out how you slept through an MBA. You seem to have missed so much!

     

    reply to this | link to this | view in chronology ]

    •  
      icon
      Ninja (profile), Sep 12th, 2012 @ 11:10am

      Re:

      As our wise friend said below, god thing Kodak left out the kool-aid and didn't buy into the digital photo hype. Good thing Blockbuster... You got it ;)

      People should learn from past mistakes, my friend. Try it, doesn't hurt and might be thrilling.

       

      reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Sep 12th, 2012 @ 11:40am

      Re:

      it hardly takes a genius to sleep through an MBA.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Aliasundercover, Sep 12th, 2012 @ 10:19am

    DRM isn't the only problem out there.

    I find DRM highly objectionable and weigh it heavily when I spend my money. It isn't quite a flat refusal on my part, more as if the price were a WHOLE LOT higher than without the DRM. I have to really want it and not have a decent alternative. Doing without is frequently that decent alternative.

    I do spend money on HBO via their traditional cable TV distribution. For all it is Triassic in relation to modern Internet distribution it does fit my basic objective. I get to trade dollars for entertainment. I don't trade my time and the chance to bombard me with messages persuading me to act against my interests for entertainment. I don't trade personal information about myself, family or friends to people intending to use it to persuade us to act against our interests for entertainment. I trade dollars and like it that way.

    So, sure, it might be nice to just buy The Newsroom or Game of Thrones or whatever at my convenience and it would be really nice to save it all on a jukebox. Despite this HBO is doing something right which matters to me.

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Joe, Sep 12th, 2012 @ 10:21am

    Blockbuster didn't want to cannibalize their video sales with streaming options

    Kodak didn't want to cannibalize their film products with digital

    HBO didn't want to cannibalize their cable products with standalone internet offerings

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Kyle Zolnierz (profile), Sep 12th, 2012 @ 10:25am

    The only question at this point is how long until they are forced into doing this. It's becoming easiesr and easier and cheaper and cheaper to get entertainment without a cable subscription. At the same time it's becoming more and more expensive to maintain a cable subscription that is technologically equivilant to the online options (HD boxes, DVR).

    I never saw myself as someone that would even consider cancelling cable. Live sports and blackout restrictions have me stuck into paying the crazy bills, and a few other quality channels like HBO, AMC, and FX have helped me justify it. That's until now, when I realized that its just not worth the $750 dollars a year I pay for essentially 3 or 4 services that I want.

    Eventually the prices just aren't going to be justifiable for people that can see more and more quality entertainment going over the top, priced closer to what they are actually worth

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    techflaws (profile), Sep 12th, 2012 @ 10:32am

    So did their math really factor in the insane popularity of the show? I'm still stumped how not making some money is better than making not money at all. Oh well...

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      Anonymous Coward, Sep 12th, 2012 @ 11:34am

      Re:

      this.

      and it's hard to believe that the awesome quality of many HBO shows doesn't act as its own advertisement. I mean, Game of Thrones isn't the most torrented show this year because of some cable company's advertising campaign.

      It's because it's brilliant cinema. And that's rare enough these days that word gets around.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    Anonymous Coward, Sep 12th, 2012 @ 12:18pm

    Proxy?

    Anyone know a Nordic proxy?

     

    reply to this | link to this | view in chronology ]

  •  
    identicon
    Thomas, Sep 12th, 2012 @ 12:35pm

    Content producers don't really have to innovate

    HBO's main business these days is making things people want to see. Not giving access to people trying to see it.

    I'm not sure it would be in their interest to get in that business. Partnering with other companies who provide the access and focusing on making content is probably what HBO should do.

    Now getting HBO on Hulu or Netflix might be a very wise decision.

     

    reply to this | link to this | view in chronology ]

  •  
    icon
    Brent (profile), Sep 12th, 2012 @ 12:44pm

    I haven't read all the other comments but its safe to say that HBO would make more money if they had an offering for those 'off the cord' as well as for those 'on'. Consider that more people watch True Blood via torrents than HBO has subscribers, then remember that at least as many people stream the episodes , then assume that, on the low end, 25% of those people would be willing to pay for the service instead of how they currently get it. HBO would still make money on this deal, even if they lost service provider incentives. I think that closer to 40% is a more realistic number to use.

    Summary: Current HBO subscribers + [Current HBO subscribers x 2 (torrents) x 2 (streaming) x .4 (40%)] x $12/month = more profit than what they make today.

     

    reply to this | link to this | view in chronology ]

    •  
      identicon
      JEDIDIAH, Sep 12th, 2012 @ 1:32pm

      That 70s Channel.

      If they do nothing. A bunch of people see their stuff for free.

      If they adapt, some of those freeloaders will start paying. They may even attract new customers that are interested in HBO but not the cable baggage that comes along with it.

      HBO needs to channel it's management from the 70s back when they were the leading edge.

       

      reply to this | link to this | view in chronology ]

  •  
    identicon
    JesseJ, Sep 12th, 2012 @ 2:28pm

    Eat it's Own

    It always seems like Apple automatically gets the most credit, but I think I recall Andy Grove (Intel) commenting once that "If we don't eat our young, somebody else will".
    (probably a little off, but the same idea)

     

    reply to this | link to this | view in chronology ]


Add Your Comment

Have a Techdirt Account? Sign in now. Want one? Register here
Get Techdirt’s Daily Email
Save me a cookie
  • Note: A CRLF will be replaced by a break tag (<br>), all other allowable HTML will remain intact
  • Allowed HTML Tags: <b> <i> <a> <em> <br> <strong> <blockquote> <hr> <tt>
Follow Techdirt
A word from our sponsors...
Essential Reading
Techdirt Reading List
Techdirt Insider Chat
A word from our sponsors...
Recent Stories
A word from our sponsors...

Close

Email This