A few years ago, when I first started using ESPN online, I often wished that I could get the same experience on TV. Last year I got my wish when ESPN 3 came to Xbox 360. If you've been having the same feelings about HBO GO, the Internet version of the venerable premium channel, you don't have to wait several years. HBO GO will be available on TV through the Roku set-top box by the end of this month, although you will still need a PayTV and HBO subscription to watch the content.
HBO subscribers now have three ways to view HBO shows on the TV: through the PayTV linear channels, on cable VoD systems and, now, via the Roku set-top box. Are all three really necessary? In particular, why would HBO add the Roku version when almost all their customers are using PayTV linear and VoD systems to watch on TV? I think there are two good reasons: service velocity and control.
One of the systemic problems with cable systems is how long it takes to add new features to the service. This is one of the reasons Brian Roberts, CEO of Comcast, made his now famous statement about the iPad liberating Comcast from the set-top box. Service velocity - the rate at which a service can innovate and change - is very slow in PayTV systems. HBO faces new competitors like Netflix that consider the speed at which they can innovate in the user interfaces and Internet "cloud" a competitive advantage. HBO must be able to match this service velocity if they are to keep up.
Of course, the issue of service velocity illustrates very well why HBO needs more control of how its content is delivered to subscribers. But there are many other reasons why HBO wants more control. For example, cable VoD interfaces provide little assistance in creating a strong brand image. As well, information on the viewing habits of subscribers is normally closely held by the operator. Both of these issues are solved by taking total control of content delivery as the company has with HBO GO.
The same market forces driving innovation in HBO's business are at work throughout the industry. Expect many other cable channels to follow where HBO and ESPN lead.
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