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Case Code: BSTR482
Case Length: 17 Pages 
Period: 1972-2015
Pub Date: --
Teaching Note: Available
Price:Rs.600
Organization : Home Box Office, Inc.
Industry :Cable Industry
Countries : US
Themes:  Business Strategy
Case Studies  
Business Strategy
Marketing
Finance
Human Resource Management
IT and Systems
Operations
Economics
Leadership & Entrepreneurship

HBO's Online Shift: A Game Changer?

 
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EXCERPTS

 

THE NEED FOR A NEW SERVICE

By the late 2000s, industry observers thought that the US cable industry was in serious need of an overhaul. As per industry practice, the cable operators grouped several channels together into different ‘bundles’ that were offered at various subscription price points. Unpopular channels were bundled with the popular ones, not only to sell channels that had a limited market appeal, but also to raise the subscription price citing the high number of channels offered in each bundle.... ....

 

 
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HBO’S ONLINE SHIFT

Nonetheless, the rapid changes sweeping through the US cable industry made HBO do a rethink of its future prospects with cable operators. Beginning 2013, the cable industry began to lose subscribers at a rapid rate. In addition, a Nielsen study pointed out that TV viewership in the US was dropping at 10% each quarter. The rising usage of computers and smartphones meant that consumers were increasingly looking for entertainment online at their preferred timings...s

INRODUCTION OF HBO NOW

Gradually, HBO realized that the future of TV was online, which prompted it to launch its new streaming service called ‘HBO Now’, through a partnership with Apple. HBO worked with Apple for almost a year to thrash out the details of the deal. It believed that the partnership with Apple would be highly beneficial for the new service. It pointed out that almost 60% of the people who downloaded the HBO GO app were users of Apple devices...

IMPACT ON CABLE INDUSTRY
 

Industry observers strongly believed that HBO, along with several sports channels, was the prime reason US TV viewers were ready to shell out almost US$ 100 for bundled cable services. HBO’s move into the online streaming space was expected to bring about considerable changes in the US cable TV industry. Analysts wondered whether HBO’s online move would prompt more TV networks to move online or to offer their programs online.....

ENTRY OF OTHER PLAYERS IN THE ONLINE STREAMING SERVICES SPACE
 

HBO’s online move was expected to spawn the launch of similar services from other TV channels. In October 2014, CBS Inc. launched an online streaming service called ‘CBS All Access’ featuring the network’s current and past shows at a price of US$ 5.99. Speaking about the new service, Leslie Moonves, Chief Executive of CBS, said, “This new subscription service will deliver the most of CBS to our biggest fans while being additive to the overall ecosystem...

ROAD AHEAD
 

In 2014, HBO added three million subscribers, the highest in the previous 30 years of its existence, primarily due to the rising popularity of its original programs. The company also had an operating income of US$ 1.79 billion...

EXHIBITS
 

Exhibit I:HBO’s Worldwide Subscribers From 2010-2014, In Millions

Exhibit II:Revenue Breakup of HBO (2014), in Billions of US$

Exhibit III:Information on Leading Cable TV Operators in the US

Exhibit IV:Leading Online Streaming Services in the US

Exhibit V:Leading Online Digital Media Players

Exhibit VI:Scenario in the US Cable TV Industry, Until 2015