HBO Go To Launch As Standalone Streaming Service In U.S. Next Year

The pay-TV network made the announcement during Time Warner’s annual investor day Wednesday.

Kevork Djansezian / Reuters

HBO said Wednesday that it would make its HBO Go streaming service available to people without a pay-TV subscription starting in 2015.

Richard Plepler, HBO's chief executive, made the announcement as part of a presentation during Time Warner's annual shareholder meeting. The move is part of a four-pronged growth strategy Plepler outlined for HBO. The home to current hit shows such as Game of Thrones, True Detective and past classics including The Wire and The Sopranos is a key part of Time Warner's overall strategy to increase its share price and prove to investors that it was justified in rejecting the roughly $80 billion unsolicited takeover offer extending by Rupert Murdoch's 21st Century Fox over the summer.

Plepler noted that there are currently 10 million broadband-only homes in the U.S. that have no access to HBO, and that the figure is only expected to grow.

"That is a large and growing opportunity that should no longer be left untapped. It is time to remove all barriers to those who want HBO," Plepler said, who added that the move has the "potential to produce hundreds of millions of dollars in additional revenue" for the network.

Launching a standalone streaming service puts HBO in direct competition with Netflix for the first time ever. News of the decision sent share of both companies in opposite directions. Time Warner stock gained $2.35, or 3.3%, to $72.99, while Netflix shares dived $15.28, or 3.4%, to $433.84. (Netflix reports third quarter earnings after the stock market's close Wednesday.)

While Plepler said that HBO would work on the standalone service in conjunction with its current partners, meaning cable, satellite and telecommunications distributors, the decision to uncouple the service from the requirement of having a cable subscription is certain to ruffle some feathers. These pay-TV distributors heavily market HBO as an exclusive premium network to drive their own subscribers.

But Plepler hinted that HBO isn't exactly pleased with the overall performance of its pay-TV distribution partners in terms of marketing the service lately. He noted that for some its partners the HBO take rate, or the number of homes in its footprint that subscribe to the network, is as much as 42% but for others it is as low as 14%.

"Some of our partners are doing a great job marketing HBO, others not so much," Plepler said. "We have been far too reliant on our operators to market HBO."

To rectify that, HBO plans to launch its first marketing campaign in 20 years. And it is safe to assume the ability to get HBO Go as a standalone service without a cable subscription will be a big part of the campaign.

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