HBO to sell subscriptions via the Internet

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While continuing to seek subscribers from cable and satellite, HBO will start to sell its service separately via the Internet next year.

"It is time to remove all barriers to those who want HBO," the network's chief executive Richard Plepler said Wednesday. "So, in 2015, we will launch a stand-alone, over-the-top HBO service in the United States."

This means that homes with Internet, but without cable, will be able to subscribe to HBO for the first time, the same way they can subscribe to Netflix (NFLX).

It's a monumental change for HBO, which is currently sold only through cable and satellite providers.

Plepler emphasized that HBO will continue to work with those providers, and will seek to grow its subscriber base that way. Roughly 30 million households currently subscribe to HBO through cable or satellite.

Selling HBO via the Internet is a second avenue for growth.

"All in all, there are 80 million homes that do not have HBO, and we will use all means at our disposal to go after them," Plepler said.

Plepler's remarks came at an event for investors held by HBO's parent company, Time Warner. (TWX) HBO and Time Warner's other divisions are under pressure to impress Wall Street, since the company turned down an $80 billion acquisition bid from Rupert Murdoch's 21st Century Fox (FOXA) over the summer.

Time Warner is also the parent company of CNN.

Much of Time Warner's revenue comes from cable and satellite companies, which pay for the rights to carry Time Warner channels such as TNT and CNN. So the company has to tread carefully while trying to hook Internet subscribers directly with HBO.

To that end, HBO declined to comment on any of the particulars of the Internet service, such as monthly price or launch date. There was immediate speculation that the Internet version of HBO might be differentiated in some way from the service that cable and satellite subscribers receive.

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In the context of the Internet service, Plepler pointedly did not mention HBO GO, the network's popular app for cable and satellite subscribers.

But he said the network would work with its existing partners and "explore models with new partners."

HBO could try to sell its Internet service to homes that have broadband Internet, but not cable. After all, many of the same companies that sell cable TV packages also sell broadband Internet subscriptions.

"First, we're going to look at the ten million broadband-only homes with our partners," Plepler said in a Q&A during the event. He called those ten million homes the "low-hanging fruit" for the network.

HBO could also try to sell its service in partnership with others, like wireless phone companies.

While Plepler's comments were limited to the U.S., he said the market for a stand-alone version of HBO could be even bigger outside the U.S.


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