HBO opens Spanish service in latest Netflix challenge
HBO plans to start a stand-alone web service in Spain, opening a new front against Netflix in an increasingly global competition for cord-cutters.
By the end of this year, residents in Spain will have access to an HBO streaming service for the first time, making the Time Warner-owned network's programming available without a pay-TV subscription.
For HBO, introducing an Internet channel in Spain - which has high rates of broadband-only homes, as well as online piracy - is a calculated bet.
HBO will now retain the exclusive rights to its shows for its streaming service and will no longer license its programming to pay-TV services in the country. That means that once current licensing deals expire, HBO fans in Spain will only be able to watch its first-run programming on the new streaming service.
Yet while HBO is giving up that licensing revenue, it believes it can make even more money long-term by offering its own web service, chief executive Richard Plepler said.
"We follow the money," Plepler said. "We're making a determination of where we think the most profits lie."
Spain is the latest country where HBO is trying to appeal to "cord-cutters" or "cord nevers" - people who cancel their pay-TV subscriptions or never sign up at all. Since 2012, it has offered a web-only channel in Sweden, Norway, Finland and Denmark called HBO Nordic.
It unveiled a stand-alone online service in the US in April and a similar offering in Colombia at the end of last year, with plans to expand it across Latin America.
The international expansion comes at a critical time. Earlier this month, Netflix said it would offer its streaming service in 130 new countries. In Spain, about three-quarters of residents have high-speed internet. About half subscribe to broadband but not pay-TV, compared with about 16pc in the US, according to the research firm Parks Associates.
Spanish residents also showed high awareness of HBO, Sutton said.
Many people in Spain have grown accustomed to watching online videos without paying for them, said Brett Sappington, director of research at Parks Associates.
"Piracy is very common," he said. "Getting consumers to be willing to pay has been a consistent difficulty" for subscription video and pay-TV services in Spain.
HBO is looking at other countries for its web-only service, but Sutton wouldn't name them. "Spain is not the first and Spain is not the last," he said. (Bloomberg)