Heads-up, cord-cutters: HBO to start online-only subscriptions in 2015

HBO's chief says the cable heavyweight next year will provide a streaming-only subscription option for its fans -- no cable or satellite subscription needed.

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Joan E. Solsman
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Shows like "Boardwalk Empire" are available on HBO's popular app HBO Go, which is currently available only to people who already pay for TV. HBO

Cord-cutters, rejoice -- you'll soon be able to watch HBO programming online without paying a full cable bill.

The premium cable channel plans to launch a "standalone, over-the-top" offering next year that will let people watch programming purely by streaming, according to HBO Chairman and CEO Richard Plepler, who spoke Wednesday at a meeting of investors in HBO's parent company, Time Warner.

"It is time to remove all barriers to those who want HBO," he said.

The move reflects how quickly technology is upending decades-long standards for how television is paid for and distributed.That rapid evolution has spurred the emergence of what are known as "cord-cutters" -- people who cobble together their daily video diet purely from online options. Cord-cutters remain a small group, but they're growing, especially among younger consumers. Companies like HBO are starting to risk breaking the lucrative standing models of the television business in order to ensure they don't ostracize the next generation of customers.

"This is a large and growing opportunity that should no longer be left untapped," Plepler said, noting that the US has about 10 million broadband-only homes and that the number is expected to grow.

Plelper provided few other details about standalone HBO service; he didn't mention pricing, timing, or device support for the service. It may not fully replicate HBO Go, the network's popular app that gives pay-TV subscribers online access to nearly the full breadth of all HBO's current and past shows as well as movies. But Plepler said the company will work with its current partners, code for pay-TV companies like Comcast and DirecTV that fiercely protect their distribution of networks like HBO.

The online HBO service will launch in the US next year, but Plepler said the company sees a huge international opportunity.

In the past, Time Warner Chief Executive Jeff Bewkes has said that Time Warner's focus for HBO would be on serving people who were already paying for television, but his tone about online-only customers has warmed in recent weeks.

In 2013, Bewkes said that HBO's main opportunity was in the 70 million or more people who subscribe to a pay-TV service but not to HBO, rather than the 5 million or 10 million who have opted out of the pay-TV system altogether. However, he said at a conference last month that "the broadband opportunity is quite a bit bigger," enough so to potentially move move the focus from one to the other.

The opportunity has blossomed with a proliferation of mobile devices, the sophistication of out-of-home connectivity networks, and the emergence of popular online video sites like Netflix, YouTube and HBO Go. Combined, the forces have created unprecedented consumer demand for options outside to classic pay-TV bundle.

HBO joins a number of programmers and TV distributors that are experimenting with online offerings. Companies like Verizon, Dish and Sony are all aiming to launch online-only multichannel video services either this year or next. They've signed up programming partners like Viacom -- the parent company of channels like MTV, Comedy Central and Nickelodeon -- and Disney, the owner of its namesake channels, broadcaster ABC and king of cable-TV sports, ESPN.

In addition, programmers like ESPN have loosened the reins on what they offer online. Last week, the NBA and Disney's high-value sports network signed a nine-year licensing deal that "established a framework" for the two to launch an online-only streaming offering.

In these moves, programmers and distributors run the risk of cannibalization: If consumers can pay a lower price for their channels of preference and no more, it erodes the incentive for them to keep paying sky-high cable and satellite bills for 500 channels. As a result, the companies often set protections to keep some of the best content behind the wall of a pay-TV subscription. While HBO's move to go "over the top" is a big step back from the pay-TV system, Plepler's comments about working with partners indicates that the service will have similar protections that will continue to make the pay-TV model alluring.

Updates 9:15 a.m. PT and earlier: Added context and details.