All the hype that surrounded the launch of HBO Now in the US, finally emulating its international experiment of HBO GO, has perhaps run away with us a bit. Recent analyst estimates of subscribers had us going past 2 million at the end of 2015, but at the Time Warner results conference this week HBO CEO Richard Plepler confessed to the number being closer to 800,000, after just 8 months.
The figure was a piece of honesty at a time when people are being far from honest about the effects of OTT subscriptions, and comes in a week when analysts confirmed that recently announced Comcast video subscriber numbers are now known to have including Xfinity Stream and On Campus numbers, which are pure OTT subscribers, which in some cases are not even paid.
In the last quarter Stream was launched in anger while On Campus went from 7 schools to 27, and these numbers were all jumbled up in a Comcast 89,000 growth in video subscribers for last quarter. This type of dishonesty helps no-one, and billing it as the first increase in video subscribers for ten years was tantamount to securities fraud.
We suspect that HBO released its own number to ensure it was not tarred with the same brush, correcting a BTIG blog post that suggested that HBO has passed this number (850,000) back in July. From there it was kindergarten math to find the 2 million number that has been bandied around for the end of 2015. The company cited huge growth to reach 2.7 million paying subscribers, to HBO, but when pushed admitted that 800,000 of these were HBO Now subs. BTIG Research had simply counted the Apple App store downloads and concluded that all of them were paying for the service.
But this will dog us all for years ahead, until OTT video is something to be proud of, not to hide. You cannot have analysts suggesting that churn has gone down, when was has actually happened is that just as a Comcast customer is about to cancel his service, he is offered Comcast Stream for a one-month free trial and the company concludes that its video subscribers have actually gone up because churn has been avoided. What you have to do is assume that everyone is lying and try to work out to what extent they are lying.
Comcast did this once before, stating that it had growth for the first time in 8 years a few years or so ago. The truth was that where a Xfinity box was shipped to an MDU it was treated as a sale for the first time. In the past it had previously been treated as a single MDU customer, because no direct contact was made with individual apartment holders. Comcast at least said this in its 6 point at the bottom of its file behind an almost unreadable asterisk.
That increased Comcast video numbers by around 1 million over two consecutive quarters, and from then on it reported more declines because the declines are now considerable. In its current quarterly results, it had no such mall print and also it has refused to isolate the Stream customers so that we could see clearly how much churn there is towards OTT from cable.
Dish has now openly added Sling TV numbers to its pay TV DTH numbers and similarly refuses to reveal how many there are of each. ARPU slides when you do this, but then against the overwhelming movement of ARPU is up, so it just goes up less rapidly.
HBO Now in all future forecasts will have to be re-aligned with these new numbers and a new trajectory calculated, and any suggestion that it can catch Netflix in the medium to near term, has to be taken with a large pinch of salt.