HBO Working Hard On 2 ‘Go’ Holdouts

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Time Warner Inc.’s Home Box Office
is still working on the final two distributors for its online
HBO Go product, predicting at least one will be in the
fold in the next few weeks.

HBO launched the HBO Go product in February
2010 with Verizon Communications and this past April
launched iPad and iPhone apps for the service, which
lets authenticated subscribers access huge amounts of
content online.

Since then, it has signed affiliate pacts for HBO Go
with every major distributor, except Time Warner Cable
and Cablevision Systems. HBO chairman and CEO
Bill Nelson said last week talks were ongoing with those
two affiliates.

“We’re in negotiations with Time Warner Cable. I’m
optimistic that we will conclude in the next couple of
weeks,” Nelson said at the Nomura Securities U.S. Media
Summit conference in New York last Thursday.

“We are in negotiations with Cablevision — not as far
along as Time Warner Cable. Maybe that comes as no
surprise to people in the markets in which they operate.
But in any event I’m optimistic that in the very near future
we will have reached an agreement.”

HBO Go is available to 80% of the premium channel’s
subscriber base and so far usage is skewing most heavily
toward HBO original content, versus movies, Nelson

Nelson said the service is most valuable as a driver of
the HBO brand, versus being a revenue driver.

He also said consumers on social networking sites are
making it “loud and clear” they want HBO Go, including
Cablevision and Time Warner Cable subscribers. “The
demand is there.”

Nelson said internationally HBO has the option to sell
HBO Go separately, instead of as an ancillary service for
HBO subscribers, especially when tablet computers like
the iPad proliferate.

HBO doesn’t have international versions of its network,
but licenses original programming such as
Boardwalk Empire, Game of Thrones and The Sopranos
to other channels, building brand recognition
that could enable HBO to sell its programming a la
carte via HBO Go.

“When that technology allows us to, we’re going to
move swiftly and aggressively and take full advantage
of that, whether from a wholesale standpoint or, if the
devices allow, in a direct to the consumer model,” Nelson

Domestically, HBO is using HBO Go to solidify relationships
with subscribers and distribution partners.

Of the 4 million homes that do not subscribe to any
pay TV service, the main targets of an over-the-top video
product, many are “economically challenged,” Nelson
noted. “That is not the target audience for premium
pay television.”