WHILE HBO CEO RICHARD Plepler said Wednesday the premium pay TV service will offer an over-the-top version of itself in 2015 to customers who aren’t traditional subscription TV customers, don’t look for it to come to Canada any time soon.
Both Bell Media and Corus Entertainment recently signed long term multiplatform deals with HBO which will allow the companies to control original and library content from the U.S. pay service likely until at least 2018. The deals with Bell (which operates TMN multiplex HBO Canada in the eastern half of the country and) and Corus (which operates Movie Central multiplex HBO Canada in the west) includes the rights to more than 700 episodes from past seasons of current programs, in addition to the 300+ episodes of HBO series that are already available
As well, Bell Media signed an even deeper contract with HBO which encompasses more than 850 hours of past scripted programming, as well as hundreds of hours of HBO movies, documentaries, and stand-up and music specials. All of this content will help Bell stock the shelves, if you will, of its online viewing portal said to be launching very early in 2015, as we have reported.
Plepler told an investors’ conference Wednesday that in 2015 the company will debut a new online viewing portal for American consumers who aren’t traditional TV subscribers – and will try to work with its current partners on it too, but he mentioned no other specifics on pricing, packaging and so forth. “It is time to remove all barriers to those who want HBO,” he said.
“The company noted that the service will be marketed to customers who do not have linear television subscriptions (cord-cutters) and that it will be sold through existing carrier partnerships,” wrote BMO Capital Markets telecom and media analyst Tim Casey in a note to investors Wednesday afternoon. “HBO is currently distributed to ~127 million customers (~43 million U.S. and ~84 million international) and Time Warner notes that it sees an immediately addressable market of 10 million broadband households that do not currently subscribe to cable TV.”
“At worst, this development suggests to us that renewal terms will be more expensive in 2018 for the relevant Canadian partners.” – Tim Casey, BMO
In Canada, nothing much will change in the medium term, given the content deals already signed. “We do not see any near-term impact to the Canadian pay television sector given that BCE and Corus recently expanded their content agreement with HBO, which now encompasses Canadian rights to all past seasons of current programs. We believe the current agreement expires in 2018. At worst, this development suggests to us that renewal terms will be more expensive in 2018 for the relevant Canadian partners,” Casey wrote.
“The impact to carriers’ incumbent video business from OTT threats can be largely offset by pricing power in the higher-margin high-speed data business,” he added.
“Furthermore, given that the new HBO stand-alone product will be sold through U.S. carriers, we expect they may be able to upsell broadband subscribers to a higher price tier by packaging HBO with the service. HBO has a long-standing and successful relationship with linear TV providers from which it generated ~$4 billion in subscription revenue in 2013. It is worth reiterating that HBO currently has 43 million television subscribers in the U.S. out of 115 million television households and has cited the target market for the new service at 10 million households.”
“All in,” explained Plepler, “there are 80 million homes that do not have HBO and we will use all means at our disposal to go after them.”
