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New HBO Go App Could Boost Media Biz

Today HBO officially launched its new app, HBO Go, to allow HBO subscribers to access its content from anywhere. Ben Swinburne, Morgan Stanley's media analyst, says this could be a win-win-win — helping Time Warner grow its subscriber base, enabling cable and satellite TV companies to hold on to their subscribers, and giving consumers more access to content.

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Here's how HBO Go works: 80 percent of HBO's roughly 30 million subscribers can download the free app from the iTunes or Android app stores to their iPhone, iPad, or android phone or tablet. The app gives on-demand access to more than 1,500 HBO titles including every episode of original HBO shows like 'Sex & The City' and 'The Sopranos.' How do you know if you qualify? It depends on your TV provider — Comcast, DirecTV, Dish Network, Verizon Fios, Cox Advanced TV, and Suddenlink are all participating. The only outliers at this point are Time Warner Cable and Cablevision).

By offering HBO subscribers more value for their monthly payment, Time Warner is looking to secure its customers and keep them from cutting the cord. Even better, this additional access to movies and TV shows could help HBO expand its penetration to the 70 million TV households who don't currently subscribe to HBO. Swinburne tells me "this should allay future concerns of growth at HBO," and its biggest near-term benefit is on perception of the business, and it could move the multiple of the stock. Longer-term he says it could bring down churn and benefit the addition of customers.

This could also really benefit cable and satellite TV providers.

Users can't access this service without subscribing to HBO in addition to the overall cable TV bundle. This could be a silver bullet in keeping subscribers from cutting the cord.

Is this competition for Netflix? It would seem two streaming video offerings would be up against each other, but in fact, they're probably not going to cannibalize each other's business. As Netflix CEO Reed Hastings pointed out to me last week, most people who subscribe to HBO *also* subscribe to Netflix. And there's absolutely no overlap of content on the two services.

If Time Warner were to start offing HBO Go directly to consumers *without* requiring a cable or satellite TV subscription, that would change everything. Then it would be a direct threat to Netflix. Time Warner hasn't announced any plans, but it seems a natural option to explore down the road.

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