Game of Cords: Why You Can’t Get HBO or ESPN without Paying for Cable

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Season two of Game of Thrones was thrilling. You had a deadly smoke assassin, Tyrion Lannister trying to hold King’s Landing together under the inept rule of King Joffrey and Jon Snow flirting with the red-headed Wildling from Downton Abbey.

Most of you know what I’m talking about not because you subscribe to HBO, but because you download the series illegally. In fact, according to TorrentFreak, Game of Thrones was the most downloaded TV show of the season. Nearly 4 million people downloaded episodes via BitTorrent during the spring, which, incidentally, is nearly the number of people who watched it on cable.

(MORE: Why HBO Is Once Again TV’s Most Relevant Network)

The next two most downloaded shows, How I Met Your Mother and The Big Bang Theory, both came in at under 3 million downloads, a much smaller fraction of their total TV viewership (both more than 8 million viewers per episode). Keep in mind that downloads through BitTorrent make up only a fraction of illegal TV viewing — plenty of people watch shows through streaming sites set up overseas.

Why are as many people illegally downloading Game of Thrones as are watching it on cable? Perhaps because they can’t get it any other way — at least not without a cable subscription. Unlike Mad Men, you can’t download Game of Thrones on iTunes, nor can you watch it on Hulu, Netflix or any other legitimate streaming site.

Thus the strange trend I noticed in my Twitter feed a few days ago. I started seeing tweet after tweet telling me how much people would pay for a standalone HBO streaming service. Turns out it was all part of the “Take My Money, HBO!” campaign started by Jake Caputo, 28, a freelance web designer from Carpentersville, IL.

“I just wanted to get the attention of HBO,” Caputo wrote to TIME in an email. “I’m not storing any data, I’m not taking a poll, I’m just trying to point out to HBO that they have people willing to pay them for a standalone HBO GO service.”

For tech-savvy consumers who watch almost everything online, the idea of HBO offering a standalone HBO GO service for $10, $20 or $30 per month seems like a no-brainer. But HBO doesn’t live on an island; it’s part of a incredibly profitable cable ecosystem that the major players have no interest in dismantling. Caputo, however, doesn’t buy it.

“Many of the arguments people are making is that HBO can’t survive without the support of big cable, but who says they’d have to cut ties? If HBO wants to offer itself for $15 on top of a cable subscription that’s fine, but why can’t they offer it for $40 as a standalone as well?”

The bottom line is that HBO’s parent company (and that of TIME), Time Warner, doesn’t want to hurt its cable business or its other networks like TBS and CNN. If HBO were independent, maybe — and that’s a big maybe — it would have an incentive to offer HBO GO to non-subscribers. But it isn’t. As Derek Thompson at The Atlantic points out, “HBO leans on cable, and cable leans on HBO.”

For cable providers to be able to charge you $80 every month, they need blue chip networks to convince people to pay for channels they might not want otherwise. One of those is HBO.

Another is ESPN. I got excited for a split second when I heard the news that live sports were coming to the Xbox 360. Then I quickly assumed (correctly) that these services — including live broadcasts from ESPN, ESPN2 and ESPNU — would be only available to cable subscribers.

Why? Because ESPN is a huge draw and cable providers are willing to pay top dollar to keep it exclusive. According to SNL Kagan, cable providers will pay an average of $5.15 per month per subscriber this year. Add EPSN 2 and all of ESPN’s other channels and the price passes $6. To put that in perspective, only a few other networks can charge even $1.

“People are nervous about the whole issue of time-shifting,” says Derek Baine, senior analyst at SNL Kagan. “I think that’s why you’re seeing, even during a recession, significant price increases in sports rights. In the future, it’s only going to get worse with DVR penetration rising and people getting more comfortable with technology and watching less TV.”

In other words, live sporting events are the one thing that viewers, cable providers and advertisers can’t get enough of. ESPN, like HBO, has the appeal to create its own hugely popular streaming product. The problem is the $6 it gets from every cable subscriber. Threaten cable and you threaten a reliable cash cow.

Even if you don’t care about HBO or ESPN, cord-cutting can still be difficult. Ever notice those great package deals cable companies offer? That’s because they don’t want you choosing only one service: Make broadband expensive enough on its own and people will opt for TV as well. If more people start cord-cutting, there’s no reason that cable companies couldn’t start increasing the price of broadband service outside of a package deal. People might be able to live without either TV or Internet, but not both.

As for the streaming services available now, there’s no guarantee they’ll remain a viable option for cord-cutters. Hulu — which counts NBCUniversal, News Corporation and the Walt Disney Company as major stakeholders — is reportedly thinking about requiring users to authenticate their cable subscription before watching.

Netflix might have plenty of TV shows ready to stream, but it’s lacking lots of recent movies. As the Starz debacle showed, content providers are wary that the money made in a Netflix deal won’t necessarily offset losses from their cable TV businesses.

So it looks like cable is safe — for now. That doesn’t mean that cord-cutting isn’t something that won’t take off in the future. “I see the issue being younger college students that have never paid for a cable subscription before,” says Baine. “If they continue on that pathway and the older generation dies, that’s when [cable providers] have a problem.”

MORE: Why You Shouldn’t Just Blame Your Cable Company for that $200 Bill

1 comments
victoria123
victoria123

I am tempted by cord cutting but with bundle price I'm receiving combined with the fact that I wouldn't be able to watch HBO plus the fact that I would miss being able to tune into CNN, I always end up concluding I'm better off staying with cable.