HBO online doomed? Don't bet on it

Samantha Bookman, FierceOnlineVideo

This week, we take a look at 10 online video services that either died an untimely death, or are struggling in today's super-competitive environment. From Xbox Entertainment Studios to Redbox Instant to Justin.tv, 2014 has seen some giants fall--and some smaller players get churned into the turf.

As disrupted as the online video environment is, it's easy for pundits to predict the demise of other hopefuls that are on the verge of going all-in on the OTT gold rush. You know, young upstarts like HBO.

As some of you may have heard, HBO plans to launch a standalone over-the-top service sometime in 2015. The announcement set off plenty of speculation, but little real detail as to how much the service will cost, what it will be called, or much else.

An article published in The Information soon after HBO made its landmark announcement opined that the premium service would not be able to compete online with a projected subscription price of $15 per month.

Here's the problem with that supposition: Subscribers who already pay for HBO are already sold on that price point. Most subs pay $11 to $17 for HBO as part of their pay-TV service. HBO isn't going to lose those subs--they either stay with their pay-TV subscription, drop it and transfer to an all-online HBO option for about the same price they were paying, or--ideally for HBO--opt to pay for both versions.

WWE faced somewhat similar criticism when it decided to offer an over-the-top SVOD service, and transition its pay-per-view events like Wrestlemania to an online platform. Its stock took a big hit when investors found out it would take the company a year--a whole darn year--to start earning the same revenues online that it was bringing in via pay-TV distribution.

The wrestling giant stuck to its guns--and signed up 667,000 subscribers in its first six weeks, each gladly shelling out $9.95 a month for the privilege of watching their favorite wrestling superstars on demand, over the top, in the cage--wherever they could swing a chair, really.

Instead of looking at surveys of cord cutters who don't pay for HBO and perhaps never have, analysts and investors should be looking at real-world examples like WWE. The key differentiator for both companies is that they already have built-in audiences who are sold on the content these providers are cooking.

In the meantime, take a look at our latest feature, The boneyard: online video sites that bit the dust… and some that may rise again. There are some key reasons why many OTT providers, such as Redbox Instant, didn't make it. And it may also illustrate why HBO's online service won't end up in the same place.--Sam

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