Open Letter to HBO: Be Like Netflix, Not Like Hulu

Dear Home Box Office.

I’m a big fan, dating back to the late 1970s when my uncle showed me Rocky on his brand new 10′ satellite dish, so I was excited to learn about your new streaming service HBO Go.

HBO Go Logo

Immediately after hearing about it’s existence I rushed to my computer, pulled up the site, and clicked “Sign Up”. That’s when I found out that only Comcast and Verizon cable TV customers who buy HBO through their cable company can watch.

What a missed opportunity. I was ready to open up my wallet and pay for content that I find worth paying for, but found out in addition to paying for HBO I would have to pay for cable TV, too.

Here’s 10 cents worth of free advice: Stop thinking of yourself as a cable channel or as a TV network and think of yourself as an entertainment provider. Stop paying Verizon and Comcast to be your middlemen. Take my money directly, like Netflix.

Be Like Netflix
For $8.99 a month, Netflix lets me stream from their website and they give access to their API so their service can be integrated into my TV, BluRay Player, or Boxee Box. (Almost 50% of their customer base stream content). No, it’s not perfect. It’s got DRM and it’s Silverlight-based so you can’t watch it on your iPhone (yet). Most content is Still SD and the HD content is only 720p. But it’s easy to use and more importantly it’s easy to pay for. It’s flexible in how I use their service and doesn’t try to nickel and dime the hardware vendors that are helping them grow – unlike Hulu.

Hulu’s Misstep
The Content Providers (ahem TV Networks FOX, NBC, and ABC) that own Hulu want Boxee et al to pay them for the privelege of pointing traffic at them (which is like wanting the phone company to pay you for printing your number in their phone book) and is attempting to block them in an effort to force negotiations, going so far as to falsely characterize their action as “illegally taking” in Congressional hearings. Why? Because they are too busy fretting over lost banner ad revenue and disproportionate per-impression ad rates compared to cable to see that Boxee is pointing a money firehose at them and pressure is just beginning to build.

…which, if you aren’t paying attention, is the same mistake NewsCorp (Owner of FOX and 1/3 owner of Hulu) and the Associated Press are making with Google News, too.

“Thanks for the customers. Now you owe me money for sending them my way. Even though your recommendations keep me afloat and I would probably be bankrupt without them, you made money by recommending me, so I deserve a cut. You must pay to advertise me.”

Hulu is doing more right than wrong, but their mistake of tying their service to a web page instead of allowing it on a TV is harming them more than helping them – much like your need to tie your online service to your cable channel will harm more than help you.

I understand that contractually you are obligated to do (and not to do) certain things, but I would hope that you see my point of view and can see the value in a cable-optional internet streaming site.

Thanks for listening,
– Gerald

P.S. For what it’s worth: I think Hulu should abandon the paywall idea, pack their site with content, license and control use of their API, grow their user base, and then negotiate better “per impression” ad rates for their in-line ads. A model I don’t recommend for you, HBO, nor for Netflix.

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2 comments so far

  1. Racket on

    A year or so ago I received a poll from Netflix asking if I would pay an additional fee for access to HBO. Now HBO has launched HBO Go. HBO does not have to worry about whole sections of a business model because they receive large chunks of money monthly from cable TV providers. Their billing department probably consists of one guy.

    Things are currently in position for HBO to offer its service to 11+ million Netflix subscribers, with billing handled by Netflix who is already in the business of monthly billing. By charging a monthly fee through an affiliate like Netflix they will retain their current business model, keep pricing in line with their cable offerings, and potentially grow their business by providing access to another group that may not be willing to pay for cable.

    HBO won’t sell directly to customers because it would increase their opperating costs, cannablize their current subscribers and anger cable tv companies.

  2. Donny D on

    I agree, I think HBO should offer a paid service for web only and allow you to watch any of their series shows. This would increase their revenue tremendously. The only problem is you would have to hope that they will allow it on Boxee and GoogleTV. Either way, I would just turn to my trusty iVox.tv app http://www.ivox.tv This app has a fully featured browser in it and allows you to watch any video content that is out there.


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