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Could HBO Drop Cable and Satellite?

December 10, 2010 | Author: sysadmindgs

The Wall Street Journal quoted Time Warner CEO Jeff Bewkes as follows:

Mr. Bewkes said that if HBO becomes ‘overly hindered by having it only available to you in $60, $80 or $100 packages,’ it could be sold separately through the channel’s existing distributors, like cable and satellite companies, or new distributors.”

The operative term in that quote is “new distributors“. An article at GigaOM provides an interesting analysis of this development, which appears to open the door to an Internet streaming version of HBO. And as the author Liz Shannon Miller points out, the clear implication is that Time Warner would be looking to partner with another service to deliver their content.

How about Netflix? The GigaOM article takes the position that this is not going to happen, as Bewkes has spoken out against Netflix in the past, indicating that such a deal wouldn’t be in the best interest of the studio.

That’s a plausible position, to be sure, but along with death and taxes, the other sure thing is change. And times are changing. HBO and Cinemax have lost 1.5 million subscribers in the past year. That’s a lot of revenue going missing. And Netflix is collecting plenty of money already, even without HBO and Cinemax. According to the latest financials, the company is on track to earn more than $2 billion in 2010. I’m just guessing here, but it may be that the old distribution models may be giving way to new models, and what didn’t make sense in the past could seem like a more attractive choice now or in the near future.

So I wouldn’t be too harsh on Bewkes if he reverses his position on Netflix at some point. There certainly are other services getting ready to take to the track in this horse race, but with Netflix already out of the gate and on the back stretch, the others may find it difficult to catch up.