"They took big chances even when it wasn't profitable to do so."
Its an old story you will see repeated again and again. When you have nothing to lose, you take big chances, when you have lots to lose you mitigate risks.
"Of course, the problem is HBO is just too tightly coupled to big cable."
Given that 'big cable' represents a big chunk of their revenue I don't know if "too tightly coupled" represents it. Basically once the acquisition cost of digital content gets ahead of its marginal market value* the revenue stream becomes more and more at risk to alternate venues (like BitTorrent). My guess is that the 'blind spot' for a lot of companies that started before the prevalent Internet and are still around, aren't looking (or believing) the economics that show how they can thrive by sharing some of the ecosystem with the likes of NetFlix or Hulu or even YouTube. So it is left to a new 'HBO' which has nothing to lose to embrace the current mechanisms and markets and to be successful to lead the way.
* I define the term 'marginal market value' to be the net economic value derived from the difference between the lifetime value of a consumer purchase less the cost to acquire that consumer. Pre-existing structures like cable content agreements can create a revenue stream which is higher than the marginal market value for new customers, and when that happens, unless the company is thinking about it, they focus more on preserving those existing over valued relationships rather than building new consumer relationships to capture that value. Externally this expresses as a company whose margins and customers slowly erode over time until they either exit the market or things get back down to the marginal market value point and can start growing again.
Its an old story you will see repeated again and again. When you have nothing to lose, you take big chances, when you have lots to lose you mitigate risks.
"Of course, the problem is HBO is just too tightly coupled to big cable."
Given that 'big cable' represents a big chunk of their revenue I don't know if "too tightly coupled" represents it. Basically once the acquisition cost of digital content gets ahead of its marginal market value* the revenue stream becomes more and more at risk to alternate venues (like BitTorrent). My guess is that the 'blind spot' for a lot of companies that started before the prevalent Internet and are still around, aren't looking (or believing) the economics that show how they can thrive by sharing some of the ecosystem with the likes of NetFlix or Hulu or even YouTube. So it is left to a new 'HBO' which has nothing to lose to embrace the current mechanisms and markets and to be successful to lead the way.
* I define the term 'marginal market value' to be the net economic value derived from the difference between the lifetime value of a consumer purchase less the cost to acquire that consumer. Pre-existing structures like cable content agreements can create a revenue stream which is higher than the marginal market value for new customers, and when that happens, unless the company is thinking about it, they focus more on preserving those existing over valued relationships rather than building new consumer relationships to capture that value. Externally this expresses as a company whose margins and customers slowly erode over time until they either exit the market or things get back down to the marginal market value point and can start growing again.