The cord cutter’s dream of not paying for a cable TV package but subscribing to HBO appeared to inch one step closer to reality with Time Warner CEO Jeff Bewkes’ comments last week that he would be open to bundling HBO with broadband Internet. Naturally, these comments set Twitter and the blogosphere ablaze with excitement over the possibility. Netflix, Hulu Plus, HBO, and an HD antenna: the perfect cord cutter bundle.
Unfortunately, as Peter Kafka rightly points out, the cable company still gets paid, and a standalone HBO will be even more expensive. I’ll take that one step further: cable companies would likely make Internet + HBO around the same price as basic cable + Internet + HBO, and incentivize you to pick the latter package because the value proposition is greater. Another scenario…is it unfathomable to think the broadband-HBO package could actually be slightly more expensive? Keep in mind the typical 6-12 month promotional rate on premium channel add-ons offered to subscribers of the double/triple play bundles.The picture looks even less rosy when you start talking about the potential for more stringent data caps down the road.
Pricing issues aside, the truth is that this fantasy is not happening any time soon. In the same article, Kafka writes:
Yes, you can also see it as the theoretical first step toward the Great Unbundling, where people actually pay for discrete channels of content instead of a mega-package of TV. But Time Warner’s entire business model is now based on video bundling, and they are in no hurry to start tearing that down.
Sure, Time Warner is in no rush to disrupt themselves. But even if they were ready and decided they wanted to start bundling HBO with Internet TODAY, this would not happen.