Time Warner Inc(NYSE:TWX): How HBO Now Lost Out On Potential Revenue


Time Warner Inc (NYSE:TWX)‘s HBO is restricting access to its HBO Now content outside the U.S. with the company moving to deactivate accounts in the U.K., Australia and other international markets. The move will help the company to cement its relationship with partners in those markets, but will also hurt its revenue growth. In cutting off illicit streaming of its content outside the U.S., HBO is acting differently compared to Netflix, Inc. (NASDAQ:NFLX).

People in countries such as Canada, the U.K., Germany, Australia and New Zealand have been taking advantage of virtual private networks (VPNs) to access HBO Now shows such as The Sopranos, Girls and Game of Thrones.

However, HBO is getting concerned that users outside the U.S. are signing up and paying to access its U.S.-only content through VPNs. In regions like Australia, users are watching U.S. exclusive content, like Game of Thrones at just $14.99 a month, instead of the higher charge of $45 a month offered by HBO partner, Foxtel.

Violation of streaming policy

HBO has issued communication to users outside the U.S., telling them about the violation of the company’s streaming policy. The users will be cut off if they cannot prove that they are based in the U.S. The emails to illegitimate users say that HBO Now is only available to U.S. residents, which means that access to the service through any other method is prohibited and violates the terms of use.

HBO further states that it will cut off users and points out their responsibility to end their automatic billing if they already have any for HBO Now services.

It is not wrong for people in New Zealand and Australia to skirt geo-restrictions, which is why some users in the markets may not know that they are breaching HBO Now’s terms of use.

Netflix does it differently

The action of HBO in blocking illicit viewing of its content from restricted locations is in sharp contrast to Netflix’s response to such conduct. Leaked emails from Sony Corp (ADR) (NYSE:SNE) showed how executives at Sony Pictures expressed frustrations at the failure of Netflix to block people streaming the service from countries where it had not launched officially. Netflix doesn’t seem bothered by users accessing its content through VPNs, perhaps hoping that is a lesser sin than piracy.

HBO trying to be a good partner

As for HBO, the company doesn’t want to rub partners, such as Foxtel, the wrong way, by seeming to undercut them through VPNs streaming. That is why the company is aggressively fighting illicit streaming of HBO Now outside the U.S.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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