New York: Time Warner Inc.’s HBO plans to offer a long-awaited online-only service in the US next year, letting viewers without a cable or satellite-TV subscription tune into “Game of Thrones” and “Boardwalk Empire.”
Richard Plepler, chief executive officer of the HBO division, didn’t say how much HBO’s new service will cost. While the number of US households that pay for broadband but not TV has climbed to 10 million and is still growing, half of those homes do pay for a streaming service online, he said.
“These consumers have no access to HBO,” Plepler said at Time Warner’s investor meeting in New York on Wednesday. “That is a large and growing opportunity that should no longer be left untapped. In 2015, we will launch a stand-alone over-the-top HBO service in the United States.”
Plepler said the the Internet-based subscription will expand beyond the US in the coming years. The Web-based offering could generate hundreds of millions of dollars for HBO, he said.
The move pits the premium channel, whose shows routinely draw Emmy nominations and water-cooler buzz, directly against Netflix Inc., which has begun to draw viewers with original programs like “Orange Is the New Black.” Netflix,
HBO and its growth prospects are a big part of why New York-based Time Warner rejected a $75 billion buyout offer from Murdoch’s 21st Century Fox Inc., saying it will be better off independent.
The HBO plans are part of Time Warner CEO Jeff Bewkes’ broader efforts to make money on new methods of delivering video. That push is part of the reason that Bewkes today forecast earnings growth for his slimmed-down media company that beat analysts’ estimates, adding to his sales pitch to investors on the value of Time Warner as an independent company. HBO GO is “both enhancing the value of the ecosystem and it’s opening up growth opportunities for HBO outside the traditional ecosystem,” Bewkes said.
It’s all part of Bewkes’ efforts to prove that he can find the next wave of growth for Time Warner after his strategy since taking over in 2008 has largely consisted of spinning off assets — Time Warner Cable Inc., AOL Inc. and most recently the Time Inc. publishing division.
HBO is typically marketed as part of a pay-TV package that costs $100 a month or more, limiting the potential pool of customers. While HBO is on track for its best US growth in 18 years, about 80 million US pay-TV homes don’t subscribe, Plepler said. HBO Go, the online and mobile version, is currently available in the US only to cable-TV customers who pay for HBO.
Time Warner has already experimented with an online-only version of HBO outside the US, and found that it increased cable-TV subscriptions, rather than cannibalizing the main product. HBO is available in more than 60 countries.
