Pay-TV juggernaut HBO has officially announced the launch of HBO Go, a video-streaming service.
Unless you are one of the 38 million cable subscribers who gets HBO or sister service Cinemax, HBO Go won't be offered to you, the company has said.
HBO Go provides subscribers Web access to the same movies HBO screens on cable TV--at no extra charge. This is the on-demand movie provider's attempt to hang on to subscribers during a down economy, as Netflix and other Web video services attract more and more consumers looking to reduce entertainment costs.
The new streaming service is an obvious attempt by Time Warner, HBO's parent company, to build a Netflix Web-streaming competitor. Expect to see more and more of these types of services from the cable guys. Time Warner is one of the companies championing the "TV Everywhere" initiative. Last summer, Time Warner and Comcast announced that they would create an authentication system that enabled subscribers and only subscribers to access those companies' TV shows and films online.
Critics have said that this is the cable industry's attempt to transfer the cable business model onto the Web.
If you're a Netflix fan, you might wonder why HBO or Comcast would bother with Web-streaming services. A huge part of Netflix's appeal is lower-cost video entertainment. Cable subscribers can jump to Netflix and pay just $10 a month to watch DVDs mailed to their home or watch the movies that Netflix streams over the Web.
But HBO pays huge fees for early access to films. HBO Go will be able to offer access to newer titles than Netflix, which, at least for now offers only older catalog films on its streaming service--and it doesn't have a huge number of those.
Access is what the cable operators and video-on-demand services are selling. The big question for them and for services like Netflix is how much consumers are willing to pay for that access. One indication that a growing number of consumers are more interested in price can be found in Netflix's recent financial performance.
Last month, Netflix's profits rose 36 percent to $30.9 million and revenue jumped 24 percent to $445 million. The company also said it had topped 12 million subscribers.
If consumers continue to look for ways to cut their entertainment costs and are less willing to pay a premium for early access to films, look for Netflix to win the streaming wars.