Analysts Predict HBO to Make $600 Million for Standalone Video Service - The UpStream

Analysts Predict HBO to Make $600 Million for Standalone Video Service

posted Friday Aug 22, 2014 by Nicholas DiMeo

Analysts Predict HBO to Make $600 Million for Standalone Video Service

With Netflix, Hulu, Amazon and Redbox owning the video-streaming service without needing to rely on customers having an active cable subscription, it would only make sense for companies tied to those cable companies to want a piece of the action. It also isn't surprising that financial groups are starting to talk about the benefit of those endeavors. This is why Barclays Capital issued a report this week saying that if HBO would sell its programming - something we all have thought would happen at some point soon - the company could make an additional $600 million per year.

The report contains the inner-workings of Barclays' analysts showcasing a bunch of different plans that could lead HBO to providing either a direct service to customers or having other companies buy its content, all while keeping cable providers happy. In one of the scenarios, HBO content would be able to be streamed at $11 per month, but the content would only be available for six to twelve months after the shows air on the network's cable offering. In other case, all HBO content would be readily available indefinitely but customers might have to pay higher than the $15 per month they pay to cable companies, about $18 a month.

If HBO chose to go with the less expensive model, Barclays analysts predict that somewhere between 4.5 and 7 million homes would pick up HBO at only $11 a month. Only 300,000 to 800,000 might opt for an $18 per month package. However, Kannan Venkateshwar, the creator of the report, says that if HBO were to offer both packages on a tiered system, HBO could rake in about $600 million each year. As a reference, HBO made about $1.7 billion in 2013.

As we've even said on the show, it makes total sense for HBO to offer its own service outside of HBO GO, which currently requires an active cable subscription and HBO subscription for the service to work. And HBO is becoming less affordable to most consumers, as cable bills are constantly on the rise. A standalone Netflix-style business model could open up huge opportunities for this current trend of cable cutters. However, cable companies would take notice quickly and may put up more of a fight than Barclays might be willing to admit.

What do you think? Would you subscribe to HBO video-streaming if you didn't have to be tied to a cable company? Do you currently have cable to have HBO Go? Let us know your situation in the comments below.

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