HBO was supposed to have a big hit on its hands with HBO Now, its cable-free streaming service that launched last April, and today we're getting an idea of how it's doing. During an earnings call this morning, HBO CEO Richard Plepler said that HBO Now has "about 800,000" subscribers paying $14.99 per month for access. That sounds pretty good for a service that launched 10 months ago and only expanded to multiple platforms seven months ago. But it falls short of what investors were looking for, with expectations on HBO to have over 1 million — if not closer to 2 million — subscribers by now.
"We're just getting started."
The harsher comparison is when you put HBO Now's growth beside Netflix's. While Now was going from zero to 800,000, Netflix was going from 62.7 million to just shy of 77.2 million — an addition of almost 15 million paying customers during nearly the same nine-month period between April and January. It's not an entirely fair comparison: HBO also sells subscriptions through cable, its service is more expensive (Netflix costs $9.99 per month), and Netflix went through an enormous international expansion during the same time period. But the dramatic difference helps to illustrate why investors were expecting more. In total, HBO added 2.7 million new subscribers last quarter.
Plepler makes it sound like HBO isn't discouraged by these initial results. "We're just getting started," he said. "I think we've made a lot of progress." Plepler points to a couple reasons why HBO Now's growth isn't yet in full swing. For one, he says, it hasn't launched yet on the PlayStation or Xbox, which account for over 20 percent of HBO Go viewing, suggesting Now could see similar traction. But more importantly, HBO hasn't yet launched content specifically targeted to Now viewers, he says. That includes shows from Jon Stewart, Bill Simmons, and Vice. When that happens, expect a much bigger advertising push around HBO Now.