The Implications of HBO’s New Standalone Streaming Service

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By , TheWrap.com     March 11, 2015 @ 6:20 am

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SAN FRANCISCO, CA - MARCH 9: HBO CEO Richard Plepler speaks on stage during an Apple special event at the Yerba Buena Center for the Arts on March 9, 2015 in San Francisco, California. Apple Inc. is expected to unveil more details on the much anticipated Apple Watch, the tech giant's entry into the rapidly growing wearable technology segment. (Photo by Stephen Lam/Getty Images)Getty Images

Content providers need to move fast since cable companies are starting to push back against networks that are not delivering the audience

It’s happening before our eyes. The cable business as we know it is in retreat and an a la carte world, streamed over-the-top, is dawning.

The announcement by HBO on Monday that it will start streaming a standalone service on Apple’s iTunes in April is a watershed moment for premium content companies. For $14.99 people who don’t have cable or satellite service will still be able to get HBO programs.

It’s hard to believe that other premium cable networks will not follow.

The cable companies had better get used to it, Time Warner CEO Jeff Bewkes essentially told an investor conference on Tuesday.

“Most of our distributors are on board with us, and they’re going to push it,” he said. “We have some that think that it’s competitive with them and they wish that they could maintain the sole place to get an HBO.”

Well that’s not going to happen. This comes on the heels of other changes among the cable bundles, including companies like Comcast offering lower-priced packages to subscribers who are pushing back on $200 per month cable bills. (Time Warner Cable immediately lowered its a la carte price for HBO to $9.99 in response to the Apple news.)

The content companies need to move fast since cable companies are starting to push back against those networks that are not delivering the audience anymore. The New York Times plumbed chapter and verse of the cable company Suddenlink dropping Viacom channels including MTV, Comedy Central and Nickelodeon.

Suddenlink is relatively small but as the Times pointed out, “The drawn-out dispute between Viacom and Suddenlink — now in its sixth month — is a sign of the deep tensions erupting across the industry. Big television and cable companies occasionally engage in short but intense battles over contract negotiations that gain national attention, with some producing serious programming blackouts.”

The ripple effects will continue to play out. Viacom’s declining ratings may lead other cable operators to drop the service from main bundles.

So if you’re a content company, you need options. And if you’re a premium creator and owner of content like HBO, you have good ones.

Enter streaming. HBO has long been on the front lines of adapting to digital disruption, including introducing HBOGo.com to make content available to subscribers anytime.

What HBO is doing with its Apple deal is tapping into some 10 million potential subscribers who are cable-nevers, millenials who do not subscribe to cable and probably never will. Some of those are people who want to watch “Girls” and “Veep” and “Game of Thrones,” and can’t get it on Netflix.

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