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Why HBO Now Is So Important for Time Warner

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Importance of HBO Now

Last week, Time Warner (TWX) announced that HBO’s programming viewership is mainly being driven by the company’s digital platforms, including HBO On Demand, HBO GO, and HBO Now. Season 6 of Time Warner’s show, Game of Thrones, had 40% of its viewership through HBO’s OTT (over-the-top) platforms, while HBO GO and HBO Now’s combined viewership for season six of Game of Thrones was 91% higher than last season.

HBO Now is increasingly growing in strategic importance for Time Warner. The company expects its subscription revenue contribution for HBO Now to increase even more in fiscal 2016. Time Warner stated earlier this year that HBO Now was close to hitting the 1 million subscribers mark. At the end of 2015, HBO Now had 800,000 subscribers.

Netflix (NFLX) had also referred to HBO Now on its fiscal 1Q16 earnings call. It stated that it believed HBO Now must already have surpassed the 800,000 subscriber mark, considering that the over-the-top service is available on different platforms—including Microsoft’s (MSFT) Xbox One and Apple TV (AAPL).

Rising trend of online television services

The rising popularity of streaming services like Netflix shows that viewers are watching more and more content online. According to a Digitalsmiths’ 4Q15 video trend report, and as the chart above shows, Netflix leads the OTT market with a share of 48%, followed by Amazon (AMZN) with a 20% market share. Hulu, Time Warner’sHBO Now, and CBS All Access are smaller players in this market. However, with Hulu’s proposed online television service, the streaming market could face upheaval.

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