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Cutting the Chord

Cutting the Chord Cutting the Chord
05/27/15
1/2
by Justine Downes & Hilary Martin
HBO now offers online subscriptions for those without cable.

Here are some things that millennials hate spending money on: landlines, health insurance, cars, and cable TV subscriptions. Firstly, there seem to be too many commercials on cable. Millennials are willing to pay more to watch fewer ads. Secondly, a cable subscription means paying for channels that they never actually watch.

With its separate online subscription option, HBO’s new service is the bridge between a premium cable channel and an internet service. But, unlike Hulu and Netflix, HBO seems intent on charging higher fees and maintaining its reputation for quality programming.

From the consumer’s perspective, the new option makes sense. Diving into the BAV database, we see that in 2014, HBO was ranked the most innovative, visionary, premium cable channel in its category. And, as compared to its biggest competitor, Showtime, HBO is more of an original leader.

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As such, the online option will likely prove beneficial as it seems to be in line with the brand’s imagery. But, at the same time, HBO must now compete with established television internet services like Netflix. In 2014, Netflix’s top attribute was “Gaining in Popularity.” And when compared to HBO, Netflix actually triumphed on perceptions of Progressive and Innovative. This means that, while HBO was once considered among the most progressive brands in its category, it must now work harder to achieve the same recognition as it expands.

Nonetheless, our research shows that HBO isn’t too far behind Netflix.

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Nicely sandwiched between Netflix and Showtime, HBO’s brand equity perfectly reflects its status as the missing link between television and Internet. Of course, as more brands follow in HBO’s footsteps, the brandscape is likely to change. What we know for now is that online subscriptions are aligned with perceptions of being forward thinking. What we don’t know is how well a stalwart brand will compete as it straddles categories.

Still, since many millennials have decided against purchasing cable, it’s about time that a brand took a leap of faith—from television to internet—to test what we all hope is true: that everyone else is watching as much internet TV as we are!

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