Sign up to receive 5 free days of our daily summary for tech news.

Read this article for free.

Already a subscriber? Log in here

Media

HBO’s Online Pricing Trap

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.”

What Is The Information?

Notes bb3aa5069205d702dda37fc71dc6f1c59df2310c4379304e9f1199f052af4884

Exclusive Articles

Receive original reporting about the most important tech companies, from Apple to Uber, in your inbox or online.

Notebook b5103017ee163370a1667c9ce59ab0ef023875a17888105d26c185cadf31bb69

Daily news analysis

Every weeknight, we'll send you our reporters’ views on the day’s top tech news—distilled into one email.

Conference calls c9e664e8b96ee347d3e92b8309938f268422b9db98cfabca5c826fbb75054b23

Conference calls

Go deep into areas like crypto and VC diversity—or get real-time analysis of breaking news—via conference calls with our reporters and other experts.

Events 499acedd16cffc41445edd76bfd302b2836c2a27419890f17130a6b10e2aa3df

Special Events

For no extra fee, subscribers get access to dozens of events a year, from intimate dinners to larger gatherings with marquee speakers.

Access the best reporting on the tech industry read by tens of thousands of global executives.

Become a contributor

Share your views and find other subscribers by completing your profile. You’ll be listed in our contributor directory.

Org Charts

Access the only collection of tech company org charts. Our expanding database includes companies like Amazon, Snap, and Uber.

Slack community

Discuss topics and current events with our subscriber-only Slack group and share news about your company with other subscribers.

Share with your team

Subscribers can unlock any article and share it with friends and co-workers through a special share link.

Stay up to date on Silicon Valley

Sign up for Jessica Lessin’s (The Information’s CEO & Founder) free Saturday newsletter and also receive a complimentary week of our daily afternoon tech commentary email.

Already a subscriber? Log in here

Recent Articles

Media Entertainment

Why Hulu’s Heavy Losses Pose Question for Disney and Comcast

By Tom Dotan

Entertainment

Esports Audiences Surge, but Better Audience Data Needed for TV Deals

By Matt Pressberg

Media Entertainment Telecom

With Time Warner Win, AT&T Inherits HBO’s Challenges

By Jessica Toonkel

Media Entertainment

For Streaming Sports Upstart, a Potential World Cup Boost

By Matt Pressberg

The problem for HBO is that by pricing the broadband service at $15, it’s unlikely to succeed either in luring broadband-only customers or in preventing a slow erosion of the pay TV “bundle.”