BusinessWeekreports that HBO is considering a move into online video downloads. The hold up according to BusinessWeek is the current agreements HBO has with cable and satellite companies.
HBO executives have been hashing out the details of what they will offer online, and a spokesman says no formal decision has been made. But programming will almost certainly be offered via a subscription service, much like the mixture of HBO movies and original fare such as The Wire, Deadwood, and Big Love now offered by cable and satellite operators for a monthly fee of $10 to $12 or more.
There may also be features that let users download HBO programming to other devices. HBO now provides full-length episodes of programs such as Entourage and Sex and the City to customers of AT&T's Cingular Wireless for $4.99 a month, but this would be the channel's first move onto the Web.
Where a new HBO service gets sticky-and why it has taken so long to put together-is that a new broadband offering would put HBO into competition with the cable and satellite operators that now pay the bulk of the estimated $3.5 billion a year in revenues HBO generates. Those "affiliates" generally pay HBO around $6 a month for each of its nearly 30 million subscribers, according to cable industry analyst Kagan Research. The arrangement generated $863 million in cash flow last year.
The end game for HBO has to be to offer downloads because that is where the industry is headed. An HBO channel would obviously be popular and people would pay a subscription to watch some of HBO's award-winning programs.