HBO’s broadband service looks doomed even before it starts.
While HBO hasn’t disclosed details, pricing of the new broadband offering most likely won’t be less than HBO’s pay TV retail price of around $15 a month, according to a person familiar with the situation. That’s $6 more than the price of Netflix’s most popular plan and a price that will likely drastically limit demand for the new service.
HBO, of course, wants to avoid undercutting its pay TV version with a cheaper offering while at the same time appealing to a group of consumers it isn’t now reaching. But at $15 a month, HBO is likely to fail at both objectives.
It will be too expensive for many people, many of whom are used to cheaper offerings from the likes of Netflix. A recent survey of broadband-only consumers by the Diffusion Group found that only 6% were moderately or highly likely to sign up for a broadband HBO service priced at $15, while 65% to varying degrees were unlikely to do so.
But as expensive as it is, the new offering won’t help HBO protect the pay TV ecosystem. Even a high priced standalone service adds to a growing array of such offerings that over time could make it easier for people to disconnect.
As Netflix CEO Reed Hastings said in an interview with The Information, how HBO will price the service is “a tricky issue for them.”