Because this is an act of war against other carries that currently carry HBO. Those carriers can drop HBO and cause revenue to drop much faster than broadband-only HBOGO subscribers will bring in new revenue. It's trading an existing, stable, proven revenue source for one that is none of the above at scale.
Edit: This is a summary of one of HBO's arguments. The dcurtis post examines a couple of other arguments. Positioning is an interesting one: How does HBO convince viewers that $5/mo is reasonable for just a few shows when Netflix is $8/mo for far more content? There are some really tough issues here.
I'll wait and see how Netflix does on producing original content; HBO seems really good at it. Over the years they've shot some amazing shows and the product speaks for itself. Even though I am a current Netflix subscriber I would still easily add HBOGO to my monthly bills for premium access to their content.
Also.. their largest carriers also serve a lot of cable internet, for most it wouldn't be adding a competition so much as adding another way to get at subscribers money. I'm not so sure they would be in a huge rush to drop them.
>> their largest carriers also serve a lot of cable internet, for most it wouldn't be adding a competition so much as adding another way to get at subscribers money.
The status quo is that the typical HBO sub has a cable bill over $150/mo, because he already has broadband. Helping that subscriber cut the cord and go Internet-only (while unbundling HBO) will therefore result in a lower cable bill for the subscriber. A portion of the money the subscriber saves comes out of the carrier's pocket. This is the classic trading of analog dollars for digital pennies, and carriers will resist it as long as they are able (in the absence of a new big revenue source).
Regarding positioning: HBO is very good at producing content, but so are a lot of the organizations that provide content to Netflix (e.g. CBS, NBC, TNT, Showtime, Disney, etc.) $8 gets you access to all of those vs. a hypothetical $5 to get the output of a single studio. It's going to be very hard for HBO to hold the line on pricing in that environment.
They don't have to drop HBO, they just have to stop advertising it. A large fraction of cable ads I see have the not-so-subtle message of: "BUY HBO! IF YOU DONT HAVE HBO THAN YOU ARE MISSING OUT AND YOUR FRIENDS WILL THINK YOU ARE UNCOOL"
How much revenue does HBO get from that marketing?
Edit: This is a summary of one of HBO's arguments. The dcurtis post examines a couple of other arguments. Positioning is an interesting one: How does HBO convince viewers that $5/mo is reasonable for just a few shows when Netflix is $8/mo for far more content? There are some really tough issues here.