The HBO Pay Channel

Paper Summary:

This paper is a case study of HBO, showing the development of a new business model for television. The model for HBO is different. The viewer pays for cable television directly, removing the influence of advertisers. Pay channels like HBO have a double link to viewers, for the viewers pay first for cable then pay for access to HBO. Pay channels of this sort often feature movies as their primary product source, as does HBO; and because cable is not broadcast the rules imposed by the FCC do not apply.

From the Paper:

"The HBO case shows the development of a new business model for television. The business model for television first developed for network radio. At that time, the programs on network radio were sponsored and were often owned by the sponsors, with some programming owned and produced by the network itself. This model was shifted to the new medium of television and then changed over time as the importance of individual sponsors diminished and the business was altered so that the networks owned the programs and advertisers paid for time to present their messages. That is the basic model that continues to this day, with the networks making an agreement to deliver certain numbers of viewers and with advertisers paying for the time to show their messages. The viewer is thus the real product for the networks, though this idea has also evolved into the belief that some viewers are more valuable than others so that a certain..."

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