A&E, History Channel, and Lifetime Channels Added to Apple TV

BaldiMac said:

I think that you are trying to shoehorn an argument that works (and I completely agree with) for a standard cable channel like ESPN into the argument for HBO. As a premium channel, it doesn't have the same issues that ESPN does.

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It deals with a completely separate set of issues, like subsidized costs from the cable and satellite providers.

Why does HBO care if you subscribe through the cable company or someone else for their service as long as they are getting the same (or more) amount of money?

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Because a customer using a streaming subscription plan only is substantially less valuable to them than a cable subscriber. A cable subscriber, indirectly and usually a small percentage of their cost, helps pay for the advertising and subsidized costs for HBO. Time Warner, Verizon, Comcast, AT&T....they cover a significant portion of HBO's overhead and advertising expenses, and that money comes from paying customers, whether they are subscribing to HBO or not. HBO, at this juncture, would be crazy to compete against that model.

Why does it matter how many there are? If there are 100 people that want to pay $16 for HBO GO on its own, that's just extra revenue. If they drop their cable HBO subscription, that's break even (or make slightly more depening on the cut that Apple, etc. takes.)

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Very faulty logic. Doesn't not take into account the number of lost cable subscribers to streaming only subscribers. And as mentioned above, streaming subscribers are far less valuable resources than cable subscribers.

In addition, if you buy HBO a la carte, you're not buying HBO. You're buying HBO, HBO 2, HBO Signature, HBO Family, HBO Action, HBO Latino.....and that's not going to cost $15 per month. You're looking at $50+ per month.

It's the same with ESPN. You will not be able to buy ESPN a la carte. You'll have to buy ESPN, ESPN2, ESPNU, ESPNNEWS, ESPN Classic, and The Longhorn Network. They wouldn't cannibalize their non-signature offerings by offering solo channels, so they will be bundled together at a high price point. And those high price points will turn off prospective buyers.

Again, why is that bad for HBO. They potentially make more money from HBO GO direct subscribers! And they have more leverage to increase their cut from cable/sat providers.

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Explained above.

Didn't seem to matter when HBO moved to satellite providers!

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DirecTV and Dish still covered substantial operating costs for HBO that cable providers were also covering. Who covers those costs in a direct-to-customers model? Do you truly believe that this doesn't give cable/satellite providers leverage to decrease how much they spend promoting HBO?

BaldiMac said:

How much less? I agree there is some issue there, but cable companies would still get additional revenue from selling HBO as a premium service as they do now. That's quite an incentive.

Until now, cable/sat is HBO's only option. If they are able to successfully expand to other delivery options, they will have more leverage to negotiate with cable/sat companies, not less. And again, I see the biggest obstacle as net neutrality. If the cable companies still get their cut, the economics are much more difficult.

I'm not arguing that the relationships won't change, but just that some obstacles like advertising aren't as big as some posters are painting them.

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Probably quite a bit less. HBO has 130 million subscribers, and I'm willing to bet that the vast majority of them are actually promotion, retention, or plan-included customers rather than HBO-specific paid subscribers. This is something HBO can hold over the heads of the pay TV subscribers to gain favor in contract negotiations. "You pay us X amount and we will continue to provide our services to your company for your use in retaining, or signing up new customers, or upgrading the plans of your current paying customers. They are required to have your service in order to have our's, and if you want them to keep paying for your service you may have to offer us for free as an incentive." It works, and very well according to this article:

http://www.highbeam.com/doc/1G1-11673371.html

If HBO were to sell direct, they wouldn't be able to hold this over the heads of the pay TV providers anymore. "So what if we include your $10ish a month channel for free with our $60+ a month pay TV service? They can buy direct from you for $10ish a month anyway." Much less incentive. Also, if they were to sell direct, they would be competing with Netflix and Hulu, so they would have to price it more competitively. Right now, the only reason Comcast (for example) charges $20 a month is to give the channel value when using it as a negotiation tool.

I would love to be able to buy HBO direct, but for right now, there is much more value to them in keeping the model as it is. Hopefully we will be able to get away from it sooner rather than later, but for now it isn't happening.

On a related note, Amazon just bought the streaming rights to HBO's back catalog of original content.

Amazon to Stream Original HBO Content

Amazon will stream a selection of HBO series, mini-series and original movies as part of its Prime subscription service, the latest alliance between technology and entertainment companies trying to capture viewers who are moving online.
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Beginning May 21, Amazon Prime members will have access to older HBO shows like “The Sopranos” and “The Wire,” and mini-series like “Band of Brothers” and “Angels in America.” Some seasons of current series, like “True Blood,” will also be available.

It is the first time HBO is making its licensed content available to online consumers outside of the traditional pay TV business.

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The last line in the quoted text is incorrect as you can buy HBO shows like The Wire to stream, but this is the first time they've been included as part of a subscription service outside of HBO.

LethalWolfe said:

On a related note, Amazon just bought the streaming rights to HBO's back catalog of original content.

Amazon to Stream Original HBO Content


The last line in the quoted text is incorrect as you can buy HBO shows like The Wire to stream, but this is the first time they've been included as part of a subscription service outside of HBO.

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Hopefully this will start the ball rolling. I can see Apple doing something similar but with current programing.

Lepton said:

All these basic cable channels that have been added require a basic cable subscription. It seems to me that later this year, you'll be able to buy a basic cable subscription from.. Apple! Bingo, Apple becomes your cable provider. A new, more sophisticated Apple TV box will follow, which runs apps and has Siri control.I bet each of these cable channels that were added are already signed to this deal.

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This comment makes a LOT of sense. Apple has recently moved the ATV from "hobby" to a stand-alone device on it's website; rumors are circling about the addition of Siri at WWDC; a refresh of the ATV has been long awaited; the OS was just upgraded and three more options added as was Dolby sound. This doesn't look like a back room project.

If Apple transitions to a set-top box using wifi - replacing the cable/sat connection and box(es) - AND if Apple becomes a contract provider ... the cord IS cut and only internet access remains an expen$ive problem.

If Apple became the cable provider, I'd sign up in a minute. I've cut the cord for five years, not because of the price, because of cable's shoddy business practices.

Davmeister said:

Wow. I'm in the UK and its not too bad here, I'm just not sure how those US Apple TVs are managing to cope with the silly number of channels they have! Navigating must be a nightmare!

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You can go to the settings to hide apps that you don't use...

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winston1236 said:

Whats the point if you have to have a cable subscription anyway? So you pay for cable and watch the channel on another box and just don't use the cable box?

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a. less commercials
b. Choose whatever show you want at any time
c. better quality than cable