HBO is currently a bundled product. To watch Game of Thrones you need a cable subscription. That means that to watch it you either subscribe to a premium package on cable or you pirate. HBO clearly do not make money on the latter and the chances are, if you are not in the US, that is the desirable option.
But consumers do realise that piracy is unlikely to sustain HBO’s incentives to invest in quality television. One of them, Jake Caputo, has set up a website pleading with HBO to take his money. He wants to be able to subscribe to HBO GO (HBO’s online option) without having a cable subscription. (Yes, apparently you need that for the online version). He invites others to submit what they would be willing to pay per month for HBO. TechCrunch estimates that the average from that data is around $12 per month. Is that enough to get HBO to unbundle its product?
Apparently (again from TechCrunch), HBO has 29 million subscribers in the US paying around $10 per month. HBO receives $8 of that. That would seem to suggest that HBO couldn’t lose by offering a $12 per month subscription.
However, the amount that it receives back from cable providers likely comes from the fact that the tying of HBO to cable is driving and keeping customers there. With an unbundled option some of those customers may not subscribe to cable and so the subsidy might end.
There are two reasons to doubt that this would be severe. First, people dropping out of cable to consume HBO’s online only will likely still consume the cable or related infrastructure for their Internet service so the contribution to the cost of that infrastructure will be preserved. Second, there are enough cable customers who still want HBO that cable providers won’t want to see HBO deciding to charge even less for HBO GO in competition with them and so will keep the subsidy to HBO high to keep that competition in check. Finally, chances are that the main beneficiaries will be international consumers of HBO and so this may dramatically expand their market — at the expense of international cable providers but my first two points apply to them too.
HBO has an independent brand and has the potential to become an independent content channel. Others will pay to bundle them for the foreseeable future so there seems to be little downside to asserting that independence and reaching a broader audience. The alternative is to follow down the music industry path and find yourself competing with free.