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HBO Now growing, but misses subscriber estimates

HBO Now, the standalone premium streaming service operated by HBO parent company Time Warner, has added 800,000 paying subscribers since it launched last April, the company announced this week.

While impressive for a fledging service, the numbers were seen as a miss by some analysts who had predicted HBO would sign up anywhere between one million and five million “cord-cutter” subscribers within the first year of operation.

Richard Plepler, the chief executive of HBO, defended the streaming service in a conference call with investors on Wednesday, saying new and forthcoming deals — including the channel’s acquisition of new Sesame Street episodes and upcoming projects with former “Daily Show” host Jon Stewart — would likely attract additional subscribers within the next few quarters.

As HBO Now increases its content library and platform availability, it’s likely the service’s subscription rate will cross the one million mark. HBO Now, which doesn’t require a cable subscription, isn’t yet available on XBox or PlayStation gaming consoles, which some households use to stream content from other services like Netflix and Hulu.

Its price point of $15 a month might also be keeping some people from signing up for the service, according to some analysts. But that cost has actually encouraged other companies to offer the channel for around the same price: Comcast, which charged customers as much as $21.95 for access to HBO’s multiplex of channels, recently announced it would lower the cost of the premium network to the same $15 a month, bringing it in line with what HBO charges for HBO Now. Like other cable and satellite companies, Comcast customers are given access to HBO Go, a similar streaming app, as part of their HBO subscriptions.

Last year, Sling TV reached a deal with HBO to bring the live east coast feed of the channel to its streaming customers. The deal also includes on-demand access to HBO’s library of TV shows and movies through the Sling TV app. And like Comcast, Sling charges the same $15 a month for access to HBO programming.

HBO is not hurting for viewership: It continues to be the most-subscribed to premium network on pay television platforms, and adding 800,000 cord-cutters only adds to the exposure its programming receives. But as more and more people move away from cable and satellite for streaming-only options, HBO might soon find itself in a position where it has to lower the cost of the app to better compete with offerings from rivals like Netflix ($9 a month) and Hulu ($8 a month).

Although cable companies are shedding television subscribers, they’re making up those numbers elsewhere: Almost all cable companies are also Internet service providers, and customers are increasingly taking advantage of faster broadband speeds as they gravitate toward streaming TV services to offset rising cable bills.

HBO is hoping to leverage that trend as it seeks more customers for HBO Now. Last year, Plepler said he hoped ISPs like Comcast would push HBO Now subscriptions as part of their broadband-only offerings.

“Let’s talk about Comcast and Charter, Time Warner Cable,” Plepler said in an interview with the Wall Street Journal’s digital publication WSJD. “They have millions and millions of broadband-only customers. We are saying a very simple thing, why wouldn’t you want to take a product like HBO that helps preserve their broadband, and think about upselling to a skinny bundle? Why not take that product, make it part of the package and share the revenue with us?”

For the time being, HBO continues pushing its cord-cutting service through platform partners, including Roku, Apple and Google.

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About the Author:

Matthew Keys

Matthew Keys is a nationally-recognized, award-winning journalist who has covered the business of media, technology, radio and television for more than 10 years. He is the publisher of The Desk and contributes to Know Techie, Digital Content Next and StreamTV Insider. He previously worked for Thomson Reuters, the Walt Disney Company, McNaughton Newspapers and Tribune Broadcasting.
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