The arrival of HBO Now in the U.S. market marks the first time that the premium content provider will be available to American consumers who choose not to subscribe to a cable contract. In a new agreement with Apple, HBO will provide streaming service to those who subscribe through Apple. Similar to the way they can download and stream music through iTunes, these consumers can access the HBO Now content on their computers, mobile devices, or Apple TV device.

This move is a first for HBO, which previously has relied exclusively on cable or satellite providers to establish the platform to send out its content and depends on these supply chain partners to take care of customer service, marketing, and billing. In the new agreement, Apple will take charge of the billing, but HBO will have new customer service responsibilities. The agreement will be exclusive for at least three months, though HBO reportedly is in negotiations with other streaming services, such as Roku, Xbox, and Fire TV, to add the HBO Now service to their line ups in the future.

To be able to stream HBO Now, Apple users must pay a $14.99 monthly fee, which is approximately the same cost to cable subscribers of adding the premium channel but about twice the cost of Netflix’s streaming service. That price was chosen with great care. HBO needed to make sure that its new streaming service would not steal too many customers from cable providers, with which it continues to partner for more traditional forms of access. In addition, HBO might plan to offer the streaming service through broadband cable providers, such that consumers could choose between a traditional cable television subscription or the streaming HBO Now, purchased from the same cable provider.

Discussion Question

Why do you think HBO is introducing this new service?

 

Source: Keach Hagey, “Apple Signs On as HBO Video-Streaming Partner,” The Wall Street Journal, March 9, 2015, http://www.wsj.com