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HBO in Apple tie-up

News, 11 March 2015
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SAN FRANCISCO: The debate about cord-cutting has taken an unexpected turn with HBO's announcement of Apple as its exclusive digital launch partner for its new streaming service, HBO Now.

"This is a transformative moment for HBO," said Richard Plepler, chief executive of the cable network, as details of the new service, aimed at households with high-speed internet access but no pay TV, were revealed.

After three months other distributors are expected to come on board alongside Apple but analysts expressed some astonishment that HBO's first partner was outside the television ecosystem.

"I'm surprised that HBO would be willing to fire such an obvious shot across the bow of all of their cable partners," James McQuivey, an analyst at Forrester Research, told the Financial Times.

"Especially when you combine it with a brand like Apple, which happens to have hundreds of millions of customers," he added. "This is not like partnering with Sony [on its new web TV offering] or an upstart online service."

Opinions were divided on what this meant for the traditional cable TV business. "It's not like the multichannel [cable] business is going to collapse, but it increases pressure on the system," said Rich Greenfield, an analyst at BTIG Research.

He pointed out that for as little as $24 a month consumers could now have access to all the offering of HBO and Netflix. "You've got to believe that there's a group of people who see a cheap alternative to cable that was never possible legally before now," he said.

But, as MediaPost observed, "Time Warner wouldn't be offering HBO Now if it thought the new service would seriously harm the existing franchise".

It cited recent research suggesting that half those expressing interest in HBO Now would drop their pay-TV subscriptions – leading to a 7% drop in subscribers.

What people say they will do and what they actually do rarely coincide however and MediaPost noted that "counting the dollars you could save snipping cable is grim work".

"Remember," it advised, "television invented the couch potato."

Data sourced from Financial Times, MediaPost; additional content by Warc staff

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