AT&T, Verizon offer HBO with basic cable and internet for $40-50; still no cable-free option
Why HBO and Pay TV Still Aren't Getting Divorced — Reminder: You still can't get HBO without paying for other TV channels, too. — But you can still get a cheapish package that includes HBO …
Context & Ripple Effects
Five years after NewTeeVee asked whether viewers would pay Comcast $10 a month for online TV (Would You Pay Comcast $10 a Month for Online TV?), the two biggest wireline distributors have answered with a discount rather than a divorce: AT&T and Verizon will sell HBO inside a basic cable-and-internet package for $40-50. The story traveled widely on pickup from Bloomberg, BGR, Deadline and VentureBeat, which says something about how charged the unbundling question had become by mid-2014.
The significance is what did not change: as of this writing HBO still cannot be bought without paying for other TV channels alongside it. The distributors' move treats HBO as pricing glue for the traditional bundle rather than a product that can stand alone.
First-order effects
- Viewers who want only HBO have exactly one legal route — a $40-50 basic cable-plus-internet package from AT&T or Verizon — so the bundle price, not any HBO-only price, sets the true cost of entry.
- Every incremental HBO subscriber still arrives attached to channels they did not ask for, keeping HBO's growth tied to pay-TV distribution rather than independent subscriptions.
Second-order effects
- Rival distributors face pressure to match discounted HBO bundles to defend their own video subscriber bases, converting HBO from a standalone revenue line into a retention lever across the pay-TV market.
- The bundle math makes HBO's economics visibly dependent on the pay-TV package, sharpening the stakes for HBO and its distributors of any future decision to sell directly to consumers.
Third-order effects
- If the only door to HBO keeps running through a cable subscription, accumulated demand for a cable-free option builds pressure on HBO and distributors alike to eventually break the tie — the same question the 2009 online-TV debate posed, still unanswered.
- A pattern of premium channels anchoring discounted bundles entrenches the pay-TV package as the unit of sale, delaying the per-channel and per-app market that unbundling advocates expected.
The trend: Pay-TV distributors are using premium channels like HBO as pricing glue for broadband-and-video bundles, holding the à la carte future at bay even as demand for it builds.