Time Warner Inc’s HBO will launch a standalone online streaming service next year to make hit shows such as “Game of Thrones” available to people who do not subscribe to cable television.
The move to take HBO “over-the-top” – media jargon that means consumers can watch the channel with only a broadband connection – is a significant milestone for a channel long dependent on cable distributors.
It could be a further catalyst spurring more people to dump their cable subscriptions by cutting the cord. It could also prompt other media companies to follow HBO’s lead.
HBO’s chief executive, Richard Plepler, announced the move during an investor day on Wednesday where Time Warner’s other top executives laid out plans to boost the company’s growth.
“In 2015 we will go beyond the wall and launch a standalone, over-the-top service with the potential to produce hundreds of millions in revenue,” Plepler said, making a reference to HBO’s massive hit show “Game of Thrones.”
“We will use all means at our disposal to grow. This is the most exciting inflection point both domestically and internationally in the modern history of HBO.”
Plepler cited that 10 million homes in the United States are broadband-only, without cable subscriptions. Half of those homes subscribe to streaming video services. “These consumers have no access to HBO. It’s a large opportunity that should not be untapped,” he said.
Shares of Time Warner, also home to movie studio Warner Bros and cable network channels Turner Broadcasting, rose 2.2 percent to close at $72.21, still short of the $85 per share offer from Twenty-First Century Fox Inc which it rejected over the summer.
Streaming video provider Netflix Inc, which announced quarterly results on Wednesday, said it had long viewed HBO as its top competitor.
“It was inevitable and sensible that they would eventually offer their service as a standalone application,” said Netflix Chief Executive Officer Reed Hastings in a letter to investors. “Many people will subscribe to both Netflix and HBO since we have different shows, so we think it is likely we both prosper as consumers move to Internet TV.”
Plepler did not disclose the price or other details about the forthcoming service. HBO currently allows cable subscribers to access its content – including popular shows like “The Sopranos” and “Sex and the City” – on mobile devices through an app known as HBO Go.
HBO’s announcement comes as Time Warner feels pressure to boost its share price after it rebuffed an $85 per share offer from Rupert Murdoch‘s Twenty-First Century Fox in August.
Disrupting the ecosystem
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