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At Launch, HBO NOW is No GO

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The past 7 days is so chock full of tech-related news, like Gigaom’s closure or updated Chromebox Pixel, feels like a year has passed since Apple announced the new MacBook and exclusive distribution of streaming service HBO NOW. I don’t know what the device maker paid for the privilege, but big benefits belong to it. I wonder: What made HBO executives think that the service benefits by tying its early destiny to a single platform during telecast of the popular Game of Thrones series?

Particularly for cord-cutters who don’t have Apple TV, iPad, iPhone, or iPod and want GoT Season 5 the choice is simple: Buy ATV for 69 bucks or spend more on another device capable of running HBO’s iOS app—or steal! On March 10, 2015, my colleague Alan Buckingham, who owns no fruit-logo products and cord-cuts, wrote that he might get the streaming box. I asked if he really plans to buy Aople TV. “I likely will”, he says. 

Price Matters
Who else, I wonder. Surely, there’s no coincidence how the new pricing works out. On March 9, Apple cut the price of ATV by $30. HBO NOW is $14.99 per month, and free for the first one. Service is available April 10, and Games of Thrones returns two days later. Presuming the series spills over into a third month, Apple TV plus HBO NOW for the duration will cost what the device did before the discount. Pricing surely is deliberate.

“Apple, instead of making a sweeping update to the Apple TV made two notable updates.” John Buffone, NPD executive director, says. “That is, more attractive pricing that aligns within, as opposed to on top of, competitive offerings and access to a desirable new service HBO NOW”. The new pricing is less than major competitors.

I see the exclusive deal as opportunity for Apple to churn up sales of this aged clunker ahead of a new model releasing later in the year. Price reduction and exclusive NOW would be good means for clearing unsold inventory off the shelves.

In the United States, the device already is top-seller in the category. During fourth quarter 2014, at U.S. retail, according to NPD: Apple TV, followed by Roku, Chromecast, and Fire TV. Before the $30 price cut, NPD forecast that U.S. streaming media player penetration would rise to 25 percent this year and to 40 percent in 2017 from 16 percent in 2014.

My family already owns Apple TV, which is the least-used streaming box in our home, generally only to view iTunes Store content the family already paid for. If not for that content, we would retire the box. Among the streamers used in the Wilcox household, Amazon Fire TV is most responsive, and Roku 3 is more than satisfactory. By contrast, ATV is unmistakably slow. My device is newest generation running the most-recent firmware, and it is still a tortoise—even without the other boxes for comparison.

As such, I wouldn’t recommend ATV to anyone who doesn’t already own Apple products, for device, content, and cloud benefits. Maybe the next model will be better, but this one isn’t—unless, of course, you want HBO NOW.

GO Where?
Most any Apple device will do, and you can even use HBO NOW in a browser, which could mean on competitors’ hardware—that is after signing up from the official app, which, to repeat, at launch is iOS-exclusive.

For owners of other Apple devices, then, who don’t otherwise subscribe to HBO but would for Game of Thrones, $29.28 to watch the series—plus other programming—should appeal, too.

That said, there are other options for existing cable subscribers. I checked around this morning, and most cable providers will add HBO for $20 monthly or much less. Locally, in San Diego, AT&T U-verse has a three-month-for-free promotion available to some customers. Big advantages: Free; watch anywhere you like, using HBO GO.

My family didn’t wait for HBO NOW, and I am satisfied with the decision. For 7 months after I cut the cord in July 2014, Cox nagged me to add Flex Watch to the Internet access, and I strongly considered waiting for HBO’s then-rumored standalone streaming service. Flex Watch costs $19.99 per month for HD cable box with local channels, plus Encore, HBO, and Starz. Price is guaranteed for 12 months; no contract required.

Last month, I signed up, adding Showtime for another $5 a month, and have no regrets. We just stream and don’t use the Cox box, which is stored in the garage. I can access HBO GO, and any of the other premium-pay channels, on most any device, any time, anywhere. NOW would mean subscribing from an Apple device. GO reaches many more.

It’s this limitation that baffles me most about the exclusive distribution deal that cuts out so many more potential new subscribers and compels me to conclude that long term Apple will benefit more than HBO.

Deal or Steal?
Still, the streaming service ventures down a path that disrupts the traditional cable model and maybe even content piracy—in conjunction with a surprising broadcast tactic.

“HBO is among a group of a few innovative networks blazing new ground by offering consumers their content outside of traditional pay TV channel bundles”, John Buffone says. “The exclusive with Apple provides significant exposure to the industry, media, and consumers that are apt to spread the word about their new service. This type of messaging is of tantamount importance as word of mouth tends to be a significant source of awareness for early adopters”.

My colleague Alan agrees. “HBO will profit from me because I was able to watch GoT early on, thanks to BitTorrent. They hooked me, and now I’ll pay”, he says. “I’m really just spending money so I don’t have to use BT—something that the content producers don’t seem believe people actually do”.

File-trading’s benefits are often overlooked by content creators or distributors like HBO. Ten years ago in May, for MindJack, Mark Pesce wrote one of the most important pieces of journalism ever about content piracy (Part One; Part Two). Before there was YouTube, and long ahead of streaming services like Hulu, BitTorrent trading of Battlestar Galactica and Dr, Who increased viewership and prompted Syfy (then SciFi) Channel to experiment by streaming full episodes online.

Turns out that many of the technical-savvy users stealing episodes, simply couldn’t wait for them to air in their area. For example, Battlestar Galactica debuted in the United Kingdom in October 2004 before broadcasting in January 2005 in the United States. Pesce explains the unexpected consequence:

While you might assume the SciFi Channel saw a significant drop-off in viewership as a result of this piracy, it appears to have had the reverse effect: the series is so good that the few tens of thousands of people who watched downloaded versions told their friends to tune in on January 14th, and see for themselves. From its premiere, Battlestar Galactica has been the most popular program ever to air on the SciFi Channel, and its audiences have only grown throughout the first series. Piracy made it possible for ‘word-of-mouth’ to spread about Battlestar Galactica.

I find interesting HBO’s broadcast plans for Game of Thrones Season 5: Simultaneous in 170 countries, which surely means to deter piracy. The approach will be an important test case of Alan’s assertion that people will pay if given opportunity. We will know next month.

If more people pay because of simultaneous broadcasts, HBO will confirm that it is the innovative network that John claims. But can the same be said about the exclusive Apple distribution deal? I wonder how many people buying Apple TV, for example, just to watch Game of Thrones will still subscribe to HBO NOW a few months later.

Photo Credit: Ariel Dovas

Editor’s Note: A version of this story appears on BetaNews.

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