Economics Don't Work for Over-the-Top HBO

HBO has about 29 million consumers paying $7 to $8 a month, on average, to watch the channel on their cable, telco or satellite TV service. Full retail prices are higher, but there is heavy promotional activity, so average revenue per customer is lower than posted retail. 

That often leads potential over the top customers to ask why HBO couldn't just offer a streaming, over the top service for perhaps $8 to $10 a month. 

HBO Senior Vice President of Digital Platforms Alison Moore says the numbers don't work. 

“Here’s the thing: it’s math,” Moore said about the possibility of splitting HBO into a standalone, over the top service. 

HBO currently has about 29 million subscribers, and reportedly receives around $7 or $8 per subscriber per month. So could a separate, over the top service be sold for about the same price? That's the rub. 

That figure doesn’t include all the other operating cost needed to support delivery of all those streams, including all the content delivery network and other costs, including sales, marketing, and support. 

Going direct to online customers by pitching HBO GO over-the-top would mean losing the support of its cable, satellite, and IPTV distributors. So the bottom line really is that HBO would lose more from its main distributors than it can make from over the top, in all likelihood.