HBO plans to start an independent streaming web service in Spain, opening a new dispute with Netflix in an increasingly global competition for streaming services. Later this year, residents of Spain will have access to an HBO streaming service for the first time, so programming on the network owned by Time Warner Inc. will be available without a pay TV subscription.
For HBO, the introduction of an Internet channel in Spain, which has high rates of broadband homes, as well as online piracy, is a calculated gamble. HBO will now retain the exclusive rights to its shows for its streaming service and it will no longer license its programming to pay for television services in the country. That means that once the current license agreements expire, HBO fans in Spain will only be able to watch their first-source programming on the new streaming service. However, while HBO will forego license revenue, he believes that you can make even more money in the long run by offering your own web servicesaid Chief Executive Richard Plepler.
"We will continue to make money," Plepler said in an interview. "We are making a determination as to where we think the most profit will be generated."
Spain is the latest country where HBO is trying to appeal to "cord-cutters", people who cancel their pay TV subscriptions or who have never signed up. Since 2012, it has offered an Internet channel in Sweden, Norway, Finland and Denmark called Nordic HBO. They unveiled an independent online service in the US in April and a similar offering in Colombia at the end of last year, with expansion plans to be throughout Latin America.
International expansion comes at a critical time. Earlier this month, Netflix said it will offer its streaming service in 130 new countries.
Meanwhile, speculation is that HBO's parent company, Time Warner, is facing pressure from investors to sell the service or leave HBO, which generates 20 percent of Time Warner's revenue. While the company has declined to comment, rumor has it that the company's shares have dropped significantly on the stock market.
During years, HBO has made money outside of the US. in three ways: DVD for sale and digital downloads, as in iTunes; licensing rights for pay-TV shows from providers or broadcasters in more than 150 markets; and the operation of its own television networks in 65 countries, mostly in central Europe, Latin America and Asia.
Your business is growing faster outside of the US than at home. The number of international subscribers to HBO and its sister channel, Cinemax, rose to 92 million at the end of 2014 from 73 million at the end of 2012, while US subscribers rose from 5.000.000 to 46.000.000 during that time. weather.
Much of its international programming is produced locally. In Latin America, for example, “Mr. Avila «, a show about an insurance salesman who leads a secret life as a hit man, gets higher ratings than Game of Thrones, according to the network.
HBO rates
The great challenge for HBO's international business is not being able to charge as much in some countries. While the Nordic service costs usd $ 10 per subscriber, but it receives around 10 cents per subscriber in Vietnam, that is why, that only 20% of HBO's revenue comes from abroad, despite the fact that two-thirds of its 138 million users are outside the United States.
Still, the network's traditional licensing strategy has been profitable, and HBO has no plans to end this strategy in many European countries, Plepler said. Recently, the company expanded licensing agreements in Germany, Italy and Canada.
"It's not a problem for us," Plepler said. "It is a multilateral strategy depending on where we think we can make the most money."
HBO retains an edge by offering an online version of its channel in other countries. Though Netflix does not have the worldwide rights to some of its series such as "House of Cards", HBO owns almost all of its programming. This means that you can use your shows on the basis of a streaming service before purchasing more shows.
The HBO service in Spain
Simon Sutton, HBO's president of international distribution and content, declined to comment on what programming will be included in the Spanish service or how much it will cost, but he hopes it will be similar to the offer from the Nordic countries, which carries shows and shows from HBO Showtime, Starz and AMC Networks. This service has about 650.000 subscribers now. The company is happy with him, Plepler said.
The Nordic service struggled when it was first introduced in 2012, in large part because it was plagued with technological problems. As well did not have movies while Netflix didsaid Kannan Venkateshwar, an analyst at Barclays Plc.
"It was largely just TV shows, so its appeal was much more limited than Netflix," he said.
In Spain, around three-quarters of residents have Internet Of high speed. About half subscribed to broadband, but they don't have pay TV, compared to about 16 percent in Americans, according to research firm Parks Associates. Residents in Spain also showed a high knowledge of what HBO is, Sutton said.
However, HBO will face competition in Spain. At least eight streaming video services already exist in the country, including that of Telefónica SA, the dominant telecommunications provider, and Netflix, which arrived in October and offers six months of free service for Vodafone Group Plc customers. HBO will have to invest in additional programming, marketing and customer service, Venkateshwar said.
Many people in Spain have grown accustomed to watching videos online without paying for them, said Brett Sappington, research director at Parks Associates.
"Piracy is very common," he said. "Getting consumers to pay has been a consistent difficulty for subscription video and paid television services in Spain."
HBO is looking to other countries for its Internet-only servicet, but Sutton did not reveal their names.
"Spain is not the first and Spain will not be the last," he said.
and the difference with hbo now?