HBO Go is one of the first battlegrounds in the escalating war between Hollywood and the Internet.
Take My Money, HBO! is a site and accompanying Twitter hashtag that helped the service’s fans let HBO know they would be willing to pay for an exclusive subscription, one that doesn’t require an expensive cable or satellite TV package.
In case anyone’s wondering, I’d pay $15 a month. Then I would cancel my cable subscription.
This has been building up for quite some time, particularly after the news that HBO’s hit show Game of Thrones is the most pirated show on the Web. Hollywood often blames the geeks up north – Silicon Valley – for the piracy problem.
“We need Northern California to figure out how to keep our intellectual property from being stolen,” said Ari Emanuel, head of William Morris and one of Hollywood’s most powerful execs at this year’s All Things D Conference, D12.
If Hollywood wants to blame anyone for piracy all they have to do is look in the mirror.
This isn’t about a bunch of computer nerds using Napster, it’s an actual change in the market. I believe people pirate shows like Game of Thrones because it’s just easier to watch that way, not because they are thieves.
The current distribution model for Hollywood, though very lucrative, is stuck in the past. User’s habits have changed from tuning in at a certain time to watch their show to simply streaming it when they have the time. We have shifted to a market that wants their entertainment when it’s convenient.
In a recent article, The Atlantic‘s Derek Thompson lays out several good points as to why HBO will never offer an independent, Netflix-like streaming option. The first point is the most poignant: whatever we are willing to pay is simply too low.
Every month, the cable companies tally up their tall piles of ~$80 monthly cable bills and send money to each of the networks in the bundle. These fees range from a few cents per-subscriber-per-month to a few dollars. HBO currently has 30 million premium subscribers. It gets a whopping $7 every month for each one. The easy arithmetic suggests that with 15 million subscribers paying $14, HBO could get the same revenue.
For now, HBO will continue to do well with its current business model and our offers to pay $15 per month can’t compete with its lucrative deals with cable providers. But, in the words of the most pirated show on TV, winter is coming.
The Internet will change this industry like it did to music and like it will do to journalism. Hollywood’s business model is ripe for disruption and industry blowhards like super agent Emanuel can sit on stage and blame Google and service providers all they want.
Hollywood as we know it will be different if a free and open Internet prevails. Movie theater’s will be replaced by the equally capable and more convenient home theater, where new releases will be streamed straight to our homes for a price. It will be a smaller industry and will make less profit without syndication deals and individual ticket sales. Small studios and indie filmmakers are already using the Internet as a way to distribute directly to their audience.
The music industry faced this problem but it saw the writing on the wall. It had to shrink, transform and accept that any profits (iTunes, streaming services and ticket sales) are better than no profits at all (CDs and piracy).
Piracy is the market’s reaction to a problem in distribution, not a massive online crime spree. If you give users a ubiquitous, reasonably priced and easy to use experience, then it becomes harder to pirate. If Hollywood wants to stop piracy it needs to compete with piracy.