While there are
so many competitors in Internet service that features streaming movies and
shows such as Netflix and Hulu, the newest addition of the HBO Go has caught a lot of attention from
public. The HBO GO steams very popular shows such as Game of Thrones and True Blood,
however in order to assess it, one needs a HBO subscription through the cable provider
that supports HBO GO. Since people who
do not have cable provider at all or have a cable provider such as Time Warner or Brighthouse communications which is not compatible to access HBO’s steaming
content, they cannot access the HBO GO. However, may people are not willing to
pay for the expensive cable subscription which is the only option to access the
HBO. This is one of the reason customers are motivated to pirate shows either
through using their friends and families’ HBO username and passwords or through
torrent. As a solution, customers are
requesting HBO to offer a standalone internet subscription for its show.
There are a
number of websites such as TakemymoneyHBO.com which has caught a lot of
attention via HBO twitter account. There are sections on the website where
people can specify the amount they would want to pay to get HBO GO and that
information can be tweeted out to the attention of HBO twitter account. Within 3
days 160,000 people visited the website and the average amount customers were
willing to pay was approximately $12 which seems to be a very reasonable price.
Standing alone would minimize the problem of privacy to a great extent when
people who are willing to get the subscription can get it without getting involved in
tedious and expensive cable subscription.
Although this
option sounds very exciting for general public, HBO does not seem to like this
idea. They seem to be happy where they are at now. This is what Eric Kessler,
the Co-president of HBO have to say “At this time, the economics simply don’t
support a standalone HBO Go,” If HBO stands alone it will have to think about lots
of other aspects such as sales and advertising, support, customer service which
right now are being taken care of by the cable and satellite companies. Additionally,
their fixed cost such as licensing fee which they are sharing with other cable
subscriber will have to be undertaken alone. These changes could be risky for
the company.
In one hand, the
decision of HBO to not standing alone will continue to motivate viewers to get
involved in privacy act and loose the revenue that it could have made from the
viewers who were willing to get the subscription of HBO GO without have to get
involved with cable services. On the other hand by not standing alone HBO will
have the market power over it’s satellite and cable companies and will get
required support for the growth of its business. The practicing manger should
take extra care to prevent piracy of their exclusive shows which will attract more customers to get the subscription.
I believe HBO is making the correct decision by not offering HBO GO as a standalone. I think there are many factors determining HBO’s decision to not offer HBO GO as a standalone subscription, things like; advertising costs, customer service cost, maintenance cost, and other costs associated with having a standalone product. An article we read in class, The Ambidextrous Organization, written by Charles O’Reilly and Michael L. Tushman, talks about how organizations can be successful with their current products and their new endeavors by creating a separate entity for their new projects, while having the management teams be closely intertwined, could give HBO’s management a blueprint of how to pull off HBO GO as a standalone, but I think what is mostly holding HBO back, is not HBO’s strategy, but its symbiotic relationship with its partners, the cable providers.
ReplyDeleteHBO has been providing its service to customers through cable providers for as long as I can remember, they have built strong symbiotic relationships with those cable providers that have been profitable for both parties. If HBO was to offer a standalone service where customers could bypass the cable providers and get HBO directly, their relationship with the cable providers would turn from symbiotic to parasitic; a relationship where one party benefits at the expense of the other. I doubt HBO would want to ruin their relationships. And I think if HBO offered HBO GO as a standalone product, the cable providers would see a drastic decline in the amount of people who order HBO. This could potentially be a legal issue for HBO, costing it millions of dollars in legal issues or it could severely hamper its future with cable providers who provide HBO to subscribers.
This comment has been removed by the author.
ReplyDeleteThis comment has been removed by the author.
ReplyDeleteI agree with Allen’s statement above. I feel that the relationship HBO has with its cable providers is important for its success. If HBO GO starts selling internet subscriptions by themselves and without cable providers, this could hurt their relationships with them. The internet subscriptions would directly compete with the cable providers causing tension. In addition, because HBO has more series and less movies than the past, viewers might not want to pay the extra money to watch these shows due to the free episodes streaming on popular television network websites. On the other hand, since cable providers are able to make more by offering extensive network packages and adding a premium for exclusive channels, HBO could benefit by giving fans a low-cost answer to this problem. This is a strategic move that needs to be taken with caution. HBO needs to look at trends in television and internet viewership to determine what is best for them in the long run and weigh the cost/benefits of each move in order to make the safest choice.
ReplyDelete@ Allen and Kimberly I agree with both of your comment.I think that if HBO GO will stand alone it will not be a right move for them in terms of cost and growth. It has differentiated itself to the point where people are paying extra buck to watch it's exclusive shows.
ReplyDeleteThis is a nice article representing the problems of a company dealing with the expansion of business. It depicts how the company needs to maintain balance between the market demand and its requirements, its customers and the company itself. I strongly agree with the decision of not offering HBO Go as a standalone because it involves lot of expenditure in terms of money for various types of costs such as customer support services, advertising costs, and costs to train and expand other supporting departments. The movement to provide HBO Go as a standalone is a risky project and involves in-depth analysis.
ReplyDeleteI agree with you shivani
ReplyDeleteOn a different front, when there are stronger competitors in the market, the onus of differentiating one's company with others becomes absolutely crucial. Differentiation can bring in more customers. On the other hand, targeting specific viewer age groups can narrow down broad viewership of the channel thus losing out on viewer ratings. To increase viewership, the channel can provide programs or movies that shall gather attention of all age groups of viewers and hence gain extra popularity.
ReplyDelete