Apple's HBO NOW exclusive is the real Game of Thrones

As the dust settles from this week's big Apple reveal, one question lingers: Who gains more from exclusive distribution of new streaming service HBO NOW? I don't know what the device maker paid for the privilege, but big benefits belong to it. I wonder: What were HBO executives thinking by tying the service's early destiny to a single platform during telecast of the popular Game of Thrones series?

Particularly for cord-cutters who don't have Apple TV, iPad, iPhone, or iPod and want GoT Season 5 the choice is simple: Buy ATV for 69 bucks or spend more on another device capable of running HBO's iOS app—or steal! Three days ago my colleague Alan Buckingham, who owns no fruit-logo products and cord-cuts, wrote that he might get the streaming box. Today I asked if he really plans to buy Aople TV. "I haven't yet, but I likely will", he says.

Price Matters

Who else, I wonder. Surely, there's no coincidence how the new pricing works out. On Monday, Apple cut the price of ATV by $30. HBO NOW is $14.99 per month, and free for the first one. Service is available April 10, and Games of Thrones returns two days later. Presuming the series spills over into a third month, Apple TV plus HBO NOW for the duration will cost what the device did before the discount. Pricing surely is deliberate.

"Apple, instead of making a sweeping update to the Apple TV made two notable updates." John Buffone, NPD executive director, says. "That is, more attractive pricing that aligns within, as opposed to on top of, competitive offerings and access to a desirable new service HBO NOW. The new pricing is less than major competitors.

For owners of other Apple devices, who don't otherwise subscribe to HBO but would for Game of Thrones, $29.28 to watch the series—plus other programming—looks like appealing, as well.

I suspect Apple will move lots more ATVs because of the discount and exclusive distribution deal. In the United States, the device already is top-seller in the category. During fourth quarter 2014, at U.S. retail, according to NPD: Apple TV, followed by Roku, Chromecast, and Fire TV.

"HBO is among a group of a few innovative networks blazing new ground by offering consumers their content outside of traditional pay TV channel bundles", Buffone says. "The exclusive with Apple provides significant exposure to the industry, media, and consumers that are apt to spread the word about their new service. This type of messaging is of tantamount importance as word of mouth tends to be a significant source of awareness for early adopters".

Deal or Steal?

My colleague Alan agrees. "HBO will profit from me because I was able to watch GoT early on, thanks to BitTorrent. They hooked me, and now I'll pay", he says. "I'm really just spending money so I don't have to use BT—something that the content producers don't seem believe people actually do".

File-trading's benefits are often overlooked by content creators or distributors like HBO. Ten years ago in May, for MindJack, Mark Pesce wrote of the most important pieces of journalism ever about content piracy (Part One; Part Two). Before there was YouTube, and long ahead of streaming services like Hulu, BitTorrent trading of Battlestar Galactica and Dr, Who increased viewership and prompted Syfy (then SciFi) Channel to experiment by streaming full episodes online.

Turns out that many of the technical-savvy users stealing episodes, simply couldn't wait for them to air in their area. For example, Battlestar Galactica debuted in the United Kingdom in October 2004 before broadcasting in January 2005 in the United States. Pesce explains the unexpected consequence:

While you might assume the SciFi Channel saw a significant drop-off in viewership as a result of this piracy, it appears to have had the reverse effect: the series is so good that the few tens of thousands of people who watched downloaded versions told their friends to tune in on January 14th, and see for themselves. From its premiere, Battlestar Galactica has been the most popular program ever to air on the SciFi Channel, and its audiences have only grown throughout the first series. Piracy made it possible for 'word-of-mouth' to spread about Battlestar Galactica.

I find interesting HBO's broadcast plans for Game of Thrones Season 5: Simultaneous in 170 countries, which surely means to deter piracy. The approach will be an important test case of Alan's assertion that people will pay if given opportunity. We will know next month.

If more people pay because of simultaneous broadcasts, HBO will confirm that it is the innovative network that Buffone claims. But can the same be said about the exclusive Apple distribution deal? I wonder how many people buying Apple TV just to watch Game of Thrones will still subscribe to HBO NOW a few months later. The fruit-logo company benefits from clearing out inventory of its aging set-top box—Trojan Horse for other devices or services.

NOW GO

My family already owns Apple TV, which is the least-used streaming box in our home, generally only to view iTunes Store content the family already paid for. Among the streamers used in the Wilcox household, Amazon Fire TV is most responsive, and Roku 3 is more than satisfactory. By contrast, ATV is unmistakably slow. My device is newest generation running the most-recent firmware, and it is still a tortoise—even without the other boxes for comparison.

We didn't wait for HBO NOW, and I am satisfied with the decision. For 7 months after I cut the cord in July 2014, Cox nagged me to add FlexWatch to the Internet access, and I strongly considered waiting for HBO's then-rumored standalone streaming service. FlexWatch costs $19.99 per month for HD cable box with local channels, plus Encore, HBO, and Starz. Price is guaranteed for 12 months; no contract required.

Last month, I signed up, adding Showtime for another $5 a month, and have no regrets. We just stream and don't use the Cox box, which is stored in the garage. I can access HBO GO, and any of the other premium-pay channels, on most any device, any time, anywhere. NOW would mean access only from Apple devices. GO reaches many more.

It's this limitation that baffles me most about the exclusive distribution deal that cuts out so many more potential new subscribers and compels me to conclude that long term Apple will benefit more than HBO.