HBO CEO Richard Plepler just doesn’t understand why traditional cable companies aren’t jumping over each other to bundle his cable-free streaming service, HBO Now, with their broadband offerings.
“If you’re [Comcast’s CEO] and you have 6 million broadband subs, why would you not bundle HBO and share that revenue with us? Why would you give up that real estate and not be paid for it? I don’t understand it,” Plepler said at the Wall Street Journal’s recent conference, according to Variety.
That reasoning does make economic sense. Why would big cable companies leave money on the table?
The answer is that they most likely view HBO as a high-profile traitor running into the embrace of online streaming and away from cable. Before this April, and the release of HBO Now, cable was the only way you could get HBO. And it was the belle of the cable ball, the type of quality programming all the cool kids talked about at work.
Now Plepler says HBO wants to be “ecosystem agnostic.” And that means Apple TV, Roku, and Amazon’s Fire TV as well.
Cable companies cannot be excited about this, and its probably causing them to dig in during negotiations.
If cable companies’ dealings with Netflix are any indication, big time cable players have begun to see “streaming” deals as more than just a short-term added value — but also as an existential threat to their business.
But even still, in the broader picture, Plepler is probably right. Those cable companies that adapt the best to what seems increasingly like an inevitable cord-cutting revolution will be the ones that thrive. The problem is that cable companies have poured stacks of money into their infrastructures, and they don’t want to abandon that overnight, even if they do own broadband services as well.
Plepler shut down the suggestion that HBO Now might cannibalise its cable subscriptions, according to Variety. And while this may be true in the short-term, it’s hard to see a booming streaming market not hurting HBO’s traditional cable subscription numbers. But at that point, HBO might not care.
HBO has only gotten HBO Now deals with a paltry two traditional cable distributors, Cablevision and Verizon. Comcast, Charter, Time Warner, DirecTV, and AT&T are conspicuously absent.
“I don’t think it’s a threat to their business,” Plepler said, clearly frustrated. “Let’s talk about Comcast and Charter, Time Warner Cable. They have millions and millions of broadband-only customers. We are saying a very simple thing, why wouldn’t you want to take a product like HBO that helps preserve their broadband, and think about upselling to a skinny bundle? Why not take that product, make it part of the package and share the revenue with us? I must tell you we are having better conversations with some than with others but the proof is in the pudding.”
It’s because they see the writing on the wall, and they don’t like it.