Astral’s plan for HBO online an incentive to discourage cord-cutting, analysts say

Astral Media Inc.’s new online TV service is a “protective measure” aiming to stop or slow the migration of cable and satellite subscribers towards unregulated over-the-top services, analysts say. But the new service is only available to TV subscribers and it's not clear whether the incentive will be effective at slowing cord-cutting, they say. Astral announced Tuesday at an annual general meeting in Toronto that it intends to launch an online, on-demand service in Canada modeled around the HBO Go platform. The new service will stream on-demand programming from Astral's programming from HBO Canada and The Movie Network and is expected to be launched by the summer. The online service, although free, will only be available to cable or satellite TV subscribers paying for the Astral specialty channels. “Our intention, first of all, is to continue to build more flexibility into our different platforms and go beyond linear services,” Hugues Mousseau, Astral’s manager of corporate communications, told The Wire Report Wednesday. Mousseau said Astral subscriber will be identified on the online platform and receive access to content that can be viewed on computers or mobile devices. “It’s really our intention to build in more flexibility,” he said. “That’s what this project’s really about.” Mousseau said Astral now makes its HBO programming available on video-on-demand platforms through distributor partnerships with BCE Inc., Rogers Communications Inc. and Quebecor Media Inc.’s subsidiary Vidéotron Ltée. He said it's too soon to say how many titles will be available on the new online service. Robert K. Yates, co-president of analyst firm Lemay-Yates Associates Inc., said in an interview that Astral’s online service is geared towards popular HBO content that the popular over-the-top service Netflix doesn't have. “HBO by itself has a lot of value,” he said. Mousseau said that the online service is a response to all foreign Internet-based broadcasters but not Netflix specifically. He said Astral believes it’s extremely important to have competitive equity in Canada and that all broadcasters should have the same rights and obligations. “What we call the OTT , they do not create jobs in this country. They don’t employ Canadians and they don’t pay taxes,” Mousseau said. “More importantly, they do not invest into Canadian content.” Mousseau said the project is “about enabling more consumers and more flexibility in terms of how consumers connect on our platforms and our properties.” Alan Breznick, a senior analyst with research group Heavy Reading, said in an interview that the new service appears to be a protective measure to try to keep subscribers from moving away from traditional TV. “Most traditional service and content providers are doing this kind of thing for free as a way of keeping their subscribers from going elsewhere, and also, keeping their subscribers more satisfied with their services,” he said. “But very few people have found a way to do that.” Telecom business analyst Iain Grant said by email that Astral’s new offer could delay cord-cutting but may not prevent it. “It will possibly delay the migration towards download TV—but Apple, Google and Microsoft are all betting that the TV experience will change significantly in the next few years,” Grant wrote. “The Astral move may well be too little, too late to stem the shift away from broadcasting for episodic dramas.” Grant said that although HBO is an important source of quality programming, it does not hold the same position as it did a decade ago when it was one of the only sources of content that wasn’t offered over-the-air. “A decade ago, if you wanted to see something edgy, programming made without the constraints of broadcast programming—think sex, violence, profanity—you turned to HBO,” Grant said. He noted that HBO has struggled in recent years as other broadcasters have released innovative programs like AMC’s Breaking Bad and Mad Men or TNT’s popular show Leverage. Breznick speculated that Astral could be preparing for a premium version of the service later on or attempting to attract more advertisers. He said Astral may also be looking to raise its advertising rates through the new service due to an ability to target consumer groups. Astral CEO Ian Greenberg told BNN in an interview Wednesday that the company plans to offer advertising packages across all of its platforms, including radio, outdour signs and television. dgrenier@thewirereport.ca

Astral’s plan for HBO online an incentive to discourage cord-cutting, analysts say

Broadcast | December 14, 2011

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