HBO on Broadband Gets Test Rollout

Service Offers Downloads for High-Speed Subs

By Jon Lafayette

HBO is making “The Wire” and its other programming available via broadband.

Unlike many ad-supported cable networks, HBO will not be streaming shows on its Web site. Instead, HBO subscribers will be able to download a large selection of shows to their computers, but only if they also buy high-speed Internet service from their pay TV provider.

Time Warner Cable, which like HBO is controlled by Time Warner, will be first to give HBO on Broadband a tryout, beginning Tuesday in the Milwaukee and Green Bay markets in Wisconsin.

HBO intends to make the service available to subscribers at no additional cost, but the decision whether to charge a fee ultimately is up to cable operators.

Eric Kessler, president of sales and marketing at HBO, said the broadband product is designed to make the HBO service more valuable to cable operators and subscribers, and ultimately bring more money to HBO by keeping subscribers signed up longer.

“We built a huge business through our distribution partners,” he said. “The goal is to build on this by continuing to work with them.”

Whether HBO on Broadband will eventually enable HBO to charge cable operators and satellite distributors more per subscriber, Mr. Kessler declined to say. But simply keeping customers longer would provide financial rewards for HBO, he said.

“If you can extend those subs, that can have a significant impact on your business,” he said.

Embracing technology has worked for HBO in the past.

The premium service saw churn decline after it introduced multiplex channels, and again when it launched HBO on Demand in 2001. Churn went down by 8% to 15% in homes with HBO on Demand compared to homes that don’t have HBO on Demand.

“The more people watch HBO on Demand, the longer they kept it,” Mr. Kessler said. HBO on Demand helped drive demand for digital boxes; HBO on Broadband helps push the triple play cable operators are promoting now.

Mr. Kessler said the service is designed to appeal to younger consumers who are used to watching video on the computer. Many of those viewers don’t subscriber to multichannel services.

“HBO on Broadband is part of an overall strategy of enhancing the basic HBO subscription by creating ways to watch HBO content the way subscribers want to watch it,” Mr. Dean said.
Deana Myers, senior analyst at SNL Kagan, said HBO needed to find a way to get into broadband.

“It’s a space you can’t ignore, and they don’t have many other ways to get into it,” other than working with their affiliates, because they’re not in the business of advertising, she said.

HBO makes billions of dollars for Time Warner annually, and it has managed to add subscribers even after the conclusion of its big hit series “The Sopranos.” According to Kagan, HBO had 28.9 million subscribers in September, up from 28.8 million in June, when the mob series went to black.

“So far, so good,” Ms. Myers said. “They still have programming that keeps winning awards and that people watch.”

And if a broadband product is another way to hold onto subscribers, it could only help.

“It’s definitely cheaper to maintain a customer than to try to get a new one,” she said.

Keeping It Fresh

HBO on Broadband will have 400 hours of programming available, including most of the 150 hours now available on HBO on Demand. About 25% of that programming is changed each month.

HBO on Broadband users also will be able to access a live HBO East feed on their computers.

At this point, the emphasis is on current movies and series, although the network might test the popularity of older series it has digital rights to, such as “Arliss.”

“Over time, we’ll experiment,” Mr. Kessler said.

In the future, some original programming may be developed for broadband, just as original programming is produced for on-demand now, he added.

Users will be able to access programming downloaded onto their hard drive as long as it is available on HBO on Broadband.

HBO on Broadband can be used on up to five computers and laptops. Content can be moved onto some Windows-compatible devices.

While they’ll be able to take downloaded programming wherever they take their laptops, users won’t be able to access the live feed away from their home high-speed service or burn programs onto disks.

After downloading the HBO on Broadband interface, users will be able to customize their account using a number of controls, including settings for children determined by adults.

Because HBO on Broadband is based on downloads, there are no community features. Those will be available on a revamped HBO.com coming in the middle of the year, Mr. Kessler said.

Time Warner Cable and HBO plan to launch HBO on Broadband in Milwaukee and Green Bay with TV spots and direct-mail pieces aimed at adding subscribers to HBO and to Time Warner’s Road Runner high-speed Internet service.