How Much Would You Pay For A Standalone HBO Go?

Last week, HBO confirmed plans to launch a standalone online service that doesn’t require you to have a separate basic pay-TV package. Beyond that, the company has provided few details, leaving both consumers and cable companies wondering what the service will actually be — and how much it will cost.

As I’ve pointed out previously, one huge impediment to a standalone HBO service is that it would require the premium cable company to dive into the business of customer service and billing, two things that it has historically left in the hands of the cable and satellite companies.

In theory, the company could avoid this by offering the standalone service through pay-TV providers, since most of them are also the primary broadband servicers to residential customers.

So HBO could make deals with Comcast, Time Warner Cable, Cablevision, etc., where customers aren’t paying for a premium TV add-on, but for an online service. This way, the cable companies still get their cut and HBO doesn’t have to be burdened with the headaches and costs of actually dealing with human beings.

Now the question is whether or not cable companies will go for that. Sure, they would still be getting a piece of the HBO pie, but they would inevitably see a number of customers drop the basic pay-TV packages that they had maintained just so they could keep watching Game of Thrones without having to find a pirated copy.

And if the cable companies were going to be part of this plan, that seems to be news to them.

This morning, NBCUniversal Chief Executive Steve Burke was talking about the quarterly earnings of parent company Comcast and he said the company was “surprised” by the HBO announcement. So if HBO has been making closed-door deals with cable companies to handle the billing for its upcoming service, it either hasn’t been talking to the country’s largest pay-TV provider, or Comcast has a good poker face.

But making a deal where the cable companies still handle all the billing for HBO would leave the network with a problem that BusinessWeek eloquently describes thusly: “HBO is a premium product that people love, delivered to them by companies they hate.”

HBO-loving cord-cutters might be able to rid themselves of the basic cable nonsense they don’t watch, but they’d still be paying money to a business they likely revile.

Another possibility would be for HBO to partner with another online service for billing and all that mess. For example, why couldn’t it make a deal to stream even more HBO content through Amazon?

Earlier this year, Amazon Prime became the first non-HBO service to stream the network’s shows on a subscription basis. However, that selection is very limited compared to the full back catalogs available on HBO Go. But it’s possible that Amazon, or Apple, or Google could eventually offer a streaming package that contains either the full archive, or at least something more substantial than the current Amazon Prime offerings.

One problem with this route involves the pending arguments over net neutrality and paid-peering.

On the neutrality front, if Internet service providers are allowed to create so-called “fast lanes” for content companies to pay more for better access to end-users, then you can bet they will do everything they can to squeeze money from anyone who takes away their precious HBO dollars.

And even if the FCC decides against allowing fast lanes, ISPs can still do what many of them have done to Netflix in the last two years — passive-aggressively allow the traffic to bottleneck until HBO pays for a better connection to the ISPs’ networks.

In the end, most people won’t care how they get the service, they just want to know how much it’s going to cost.

The number that gets bounced around most frequently is $15/month, which is what many people currently pay to their cable providers for the HBO package.

But will people be okay with that fee when it’s for an online-only service?

It’s significantly more money than the monthly fee Netflix (or the monthly cost of an annual subscription to Amazon Prime). Netflix offers a much larger library of movies — but not the HBO shows — and Amazon Prime includes various other benefits for the site’s shoppers, along with the smattering of HBO content.

The $15/month one pays now for HBO usually includes multiple HBO channels, along with multiple Cinemax channels and access to HBO Go and the lesser-discussed Max Go. If the network is going to take away the option of watching live programming, it would seemingly have to go with a lower price in order to win over enough viewers.

The other route would be to offer additional content that isn’t available to TV viewers; setting up a direct competitor to Netflix with the HBO content as the primary draw.

Another thing that HBO would need to do to justify charging $15 for its streaming service is to iron out the kinks that it’s had when HBO Go has been faced with high demand. It seems like every major season finale or season premiere results in stories about the service crashing from high demand.

So far, it’s been able to weather that storm by pointing out that the content people were looking for was readily available via their TVs and that HBO Go is a free bonus to subscribers (the tacit implication being that all the freeloaders using their friends’ HBO Go passwords can just shut up about it).

But when people are paying a premium price, they will demand a premium level of service. Blocky image quality and sound problems will not be tolerated, especially when anyone who knows how to navigate the Pirate Bay can find the latest HBO shows (illegally) for free.

NBC’s Burke, who obviously has a vested interest in promoting skepticism of the service, predicts that “it’s going to be a challenge for [HBO] to not cannibalize what is already a really, really good business.”

by Chris Morran via Consumerist