One of the big announcements at IFA last week was cable channel HBO’s decision to launch its own online subscription service separate to its regular cable TV offering. HBO Nordic will operate in Sweden, Finland, Norway and Denmark when it begins operations later this month. For €10 a month users will be able to access TV shows and movies from HBO’s substantial back catalogue on any Internet-connected device. If the experiment is a success it will prove a significant win for both the channel and its parent company Time Warner. The price of failure varies is the gifting of a whole market to Netflix. Effectively what this represents is a battle of two approaches: HBO’s premium model and high quality content versus an expansive low-price option of second-run movies and TV shows. There are also some interesting subplots about HBO’s UK broadcast partner, Sky, and its main competitor in original programming, AMC.
As previously covered in this column, Netflix has made no secret of its ambitions to compete with HBO in the past. On launching in Ireland last January, CEO Reed Hastings said Sky Atlantic (HBO’s original output under a BSkyB brand available as part of a multichannel package), and not Sky Movies was his main target. He elaborated that he didn’t want people to think of Netflix as a broadcaster, not a niche service. The message seems to be getting through. Thanks to a free one-month trial offer over 1 million people signed up in the UK and Ireland (specific figures have not been released for the Republic) from January to July. Any enthusiasm will be tempered by an under-populated catalogue will suffer from substantial audience fluctuation (‘churn’).
As a counter-measure Sky launched its own Web-based movies on-demand service Now TV in July, charging £15 a month or as a pay-as-you-go option for UK customers. It remains to be seen how audiences will take to a standalone service with a superior catalogue at more than twice the price of its competitor. Sports and TV shows are expected to be added. Note this is not seen as a replacement or competitor for Sky Go, an Internet-based service for pre-existing Sky customers.
HBO’s decision to go it alone in Scandinavia allows it to honour its agreements with Sky and gives it a head start on a market without Netflix penetration. So what will users get for their €10 a month? Access to HBO’s back catalogue of original programming and movies, including Boardwalk Empire, Game of Thrones, The Wire and True Blood – that’s a lot of quality material.
If HBO’s content proposal is superior to Netflix’s – and it mostly is – the draconian terms users will need to access it on a mobile device would make Apple blush. Where the iPhone maker caused a storm by initially limiting the handset to only a single network, HBO is doing virtually the same to Android users by locking in access to only Samsung handsets (from October they will ship handsets with a native app) on a single network. In contrast, Netflix shows up anywhere it is welcome, be it online; through apps for iOS, Android and Windows Phone; on consoles like Xbox 360 and PlayStation 3; streaming boxes like Roku and Apple TV; and smart TVs. Such is the difference between a distributor of content (Netflix) and a ‘creator’ that believes its content retains value and shouldn’t have to undergo a natural lifecycle ending in a streaming services ghetto.
Where HBO truly holds the upper hand, however, is the fast turnaround from first US broadcast to online streaming. Nordic subscribers will be able to enjoy same day-and-date release of new episodes. This is something Netflix cannot compete with, even though it carries similarly acclaimed series like AMC’s Mad Men, Breaking Bad and The Walking Dead (all three could be considered as good as anything HBO offers) the slow turnaround of content is a serious deficiency. If Netflix wants to keep up it has to look into making nice with AMC.
Should we be getting excited about HBO without Sky? The bad news for us Irish viewers is that existing deals with distributors and Sky almost ensures we won’t be getting such a service from HBO any time soon. Given the choice, however, I’m sure thousands of disgruntled former Netflix subscribers (and even some current ones) would jump at the chance to access a proven back catalogue. Let the search for appropriate geoblocking software begin!
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