HBO recently unveiled its new standalone streaming service, HBO Now, as an alternative to cable and satellite subscriptions. The move suggests that the days are numbered for cable companies.
According to studies, adults in the U.S. are watching less and less live TV every day. They're instead moving toward services like Netflix, which has made it into 36 percent of U.S. households.
These trends are frightening for the entertainment industry, and a number of companies like HBO are scrambling to take on the likes of Netflix and Hulu. Cable companies have seen a huge decline in ratings, which became even more pronounced toward the end of 2014. Cable ratings in general fell 9 percent in 2014, compared with a 3 percent drop in the previous year.
HBO's new offer will probably be a big blow to cable subscriptions. HBO has been cited as one of the main reasons people are holding onto their cable subscriptions, along with ESPN. With one of these two services now offering a streaming service, a lot of viewers will likely ditch the cable subscription in favor of something a little more flexible.
HBO, however, says that it isn't targeting those who already have a cable subscription with its new streaming service. Instead, the network wants to bring HBO to the 80 million U.S. homes that don't already have it in one form or another. That would include not only the "cord-cutters" (people moving away from traditional TV), but also the so-called "cord-nevers" (those who never subscribed to a traditional TV service).
HBO Now does have an Achilles heel, however, and that is the price. While services such as Hulu Plus and Netflix charge less than $10 per month, HBO Now costs $15. That's more than the cost of HBO through a cable subscription, which starts at $10 through the likes of Comcast and Time Warner. Some even provide HBO for free as a promotion for their more expensive TV packages.
Traditional TV is still king, but HBO Now is another nail in that king's coffin. As young people — who are more inclined to stream — grow up and seek the flexibility of a streaming service, it's highly unlikely that they'll subscribe to traditional TV. It will be a very interesting few years as cable companies continue to shift toward streaming-based services.