You gotta hand it to the writers over at The Oatmeal…they know how to start a debate. Whether it be here on this site or any of the other number of sites, the comic about pirating Game of Thrones due to its lack of streaming availability has sparked some incredibly vocal controversy.
Some are waging in on the mental attitude of pirates, some about HBO’s potentially out-dated business model, and even some are arguing over whether it’s possible to steal things that aren’t physical ‘things.’
All of these discussions are thought-provoking and entertaining topics of deliberation – but there’s something that appears to be missed or ignored in this whole debate session, until recently on the AV Club, and yet is almost directly front-and-center from the source of the discussion:
People are fighting hard against the wrong villain.
As shown in the comic, the only way currently to see Game of Thrones online without the potential of getting arrested is to purchase a monthly subscription of HBO through your cable or dish service provider, and then you will have the ability to stream the show via HBO’s online streaming service HBOGo. Therefore, if you have an HBO subscription already you can stream it online, and if you do not you can purchase the monthly subscription for the channel via your cable service provider, and then you can stream the show.
The consumers that leaves out in the cold are the people that don’t have cable, nor want to purchase cable specifically for one channel (let alone one show). With the above mentioned services offering network television programs online for about 1/10th the monthly cost of cable the number of those consumers is rising. It’s simply just more cost-effective for a person to pay 8 dollars a month to watch 80 percent of the shows they want online and wait for their availability on that platform (sometimes months after the show initially aired on television) versus 50+ dollars to see 100%of the shows as they air.
It’s C grade service with A grade cost versus A grade service with D grade cost.
So Why Doesn’t HBO Tap Into the Online Market By Streaming Shows For a Fee?
With all these avenues in which HBO has the ‘ability’ to stream Game of Thrones and charge for it either on a per episode basis or through subscription to a direct online streaming service the question becomes, “Why don’t they?” They can obviously make a lot of money doing so by appeasing a market of consumers they have currently shut themselves off from; so what’s hindering them?
The companies with the most to lose by a direct HBO to consumer relationship are the cable/satellite service providers (ie Time Warner, ComCast, AT&T, etc).
In a web article published on Ad Age in January of 2010 the reporter speculated that Web Televisions may be the cable industry’s largest battle over the next couple of years, which is technically right now. A television set that connects directly to the internet offers a path to network content to be watched on a TV without the need of a cable subscription.
If Game of Thrones is offered on HuluPlus or Netflix, who doesn’t receive a paycheck for that service order? If the shows are made available to download on iTunes or Amazon for a couple bucks an episode, who doesn’t receive a paycheck for that purchase? More dangerously to the affected parties, if HBO offers a streaming service outside of their television channel subscription who can potentially lose an incredible amount of revenue because of that? HBO is not a free channel bundled in with a basic cable subscription, so what’s stopping a consumer from dropping HBO from their television package and getting it through an online streaming service? HBO won’t care because they still have the customer, but the offering company of their cable subscription just lost money, and if HBO was the primary reason they had cable to begin with then they have just lost a customer completely.
The next piece to the puzzle is the hypothetical “Well, then why doesn’t HBO just offer an online service outside of television programming even when whatever contract they have with cable company A is up?” And the possible answer to that was found in the same article from Ad Age:
“…one tech exec, who asked not to be named, predicted that the minute cable operators start to feel the disruption, they will clamp down and use their market power to keep TV and films from seeping into next-generation devices. They’re already putting the squeeze on networks; any free distribution is an argument for lower cable distribution fees. “
Therefore, is it worth it for HBO to even attempt to offer a streaming service non-sanctioned by the cable operators at the risk of not being able to reach customers who don’t stream and only watch television on the television? Essentially, is it worth the risk to be an online programming entity only, because Time Warner, ComCast et al would probably, very happily, black out HBO across the board to be watched on television.
They Don’t Need HBO but HBO Needs Them
If HBO wanted to stay in the business of actually producing shows (which for shows like Game of Thrones is incredibly expensive) they would need all of those customers who they just hypothetically lost to either go to another provider that offers HBO (if that’s even an option for the customer depending on their area of residency and if there’s still a provider willing to negotiate to keep HBO despite the existence of a streaming service which they receive no money for), or purchase the monthly subscription directly from HBO to watch their programs online (but only online).
That’s a pretty risky move.
In either method that will leave some consumers out in the cold to be able to watch Game of Thrones without waiting for the DVD release. It’s either blocked off for those that don’t want cable or dish (as is currently), or those that don’t want to watch it online (and the folks at ThinkProgress make a good point of why they should choose the latter). Unfortunately, HBO is quite possibly in a position to have to pick one or the other, and if they pick the wrong one it could mean the end of HBO orginal programs as we know it.
It’s possible that Game of Thrones exists exactly because it’s not available online.
The final piece of this is one of future development, and that is whether or not Netflix’s purchase of Arrested Development to program new shows made available strictly through their service proves to be financially successful. If so, and if lavishly successful, it may give HBO the incentive to take the boot off the cable provider foot pinning them down and to strike the owner with it.
Either way, it seems to be that we’re moving towards a model that is unmistakably formed by consumers. Most likely what we’ll see in a transitional phase is for HBO to find a way to stream a few episodes of a given show temporarily to non-subscription customers to pique the interest for someone to want to purchase a subscription to their channel; and therefore give cable providers the money they want to keep HBO as an offered option. It’s similar to how Hulu is able to stream episodes of new shows the day after they air to help form an audience, but after a few months of success the network will force the availability of future shows on the service to be delayed weeks, or sometimes over a month depending on the show’s viewership.
However, if the success of services such as Hulu can garner subscription numbers comparable to the combined power of the cable providers then it’s very possible that the cable providers will no longer hold as much of an upper hand as they appear to; and as a result do one of three things:
- Offer their own comparable and competitive streaming service; or
- See their product diminish in value, resulting in an industry switch which they will find themselves in the minority; or
- See them use their lobbying power to pass a law which will give them the right as an Internet Service Provider (along with cable, who typically offers you your internet service?) to block IP Addresses for websites that stream content and pay them no fee.
Which puts us back at square one….
What’s your take?