MAX OUT

What does HBO Now mean for budding Cinemax?

Obsession
Glass
Obsession
Glass

HBO will officially be available to you over the internet—no cable TV subscription necessary—starting in early April. What does that mean for its increasingly valuable sister channel Cinemax? Once a home for softcore pornography, Cinemax now boasts a solid lineup of its own shows including Stephen Soderbergh’s 1900s medical drama The Knick, a series that is as good as any currently on HBO.

“HBO will always be the big brother,” Kary Antholis, head of Cinemax’s original content, told Quartz last year. “Our goal is to build Cinemax to the point where it’s the preferred second tier in premium television.”

But becoming the “preferred second tier” does not, apparently, involve a standalone internet service like the one HBO is getting. HBO spokesman Jeff Cusson told Quartz that HBO Now will not include Cinemax shows, nor will the company be launching an equivalent “Cinemax Now” service—at least “not at this time,” he said.

There was reasonable hope that HBO would launch a “Cinemax Now” streaming service to pair with HBO Now. Currently, Cinemax subscribers have access to the streaming service Max Go, just as HBO subscribers have HBO Go. They’re separate products with different content libraries that require separate logins. Cable subscribers in certain regions automatically get Cinemax as a package with their HBO subscriptions (meaning they get both HBO Go and Max Go), while the two channels come separately for many others.

Some media analysts, prompted by Time Warner CEO Jeff Bewkes, floated the idea of an HBO Now with tiered pricing. The most expensive option, perhaps, could have included Cinemax shows in addition to the HBO catalog. If HBO launches the service with some of its existing partners (cable and internet companies), it’s possible that those partners would offer a different price than the $14.99 that HBO Now will cost via Apple. In the FAQ on the HBO Now website, the company says that “prices may vary by participating partners.” In that case, it seems feasible that these partners could try bundling Cinemax into HBO Now through their services, with HBO’s permission.

Before the official HBO Now announcement, REDEF did a deep dive on the future of HBO (as well as Netflix) which included some analysis of Cinemax. Here’s what it said about the relationship between HBO and its little sister channel:

One of the most challenging questions facing Home Box Office today is what role Cinemax, HBO’s jointly-managed sister network, will play in the company’s over-the-top future. In a linear world, the decision to operate to two premium channels was as straightforward as it was profitable. Through HBO and Cinemax, Home Box Office was able to serve multiple demographics during the same time slot, extract additional revenue from the TV-obsessed and drive bundle-based stickiness that would help defend its territory from Showtime Networks and Starz Inc.

In a digital environment, however, this strategy plays out differently. Here, Home Box Office’s multi-network model represents a deliberate choice to stand-up a second, technologically unnecessary service rather than make its HBO offering richer and deeper. Case in point: Cinemax’s MAX GO, which looks and feels just like HBO GO. The TV Everywhere service has a content library that would undoubtedly delight (and likely attract more) HBO customers, including titles such as Gravity, Godzilla, Her, The Last King of Scotland, and Casino Royale. Yet it remains entirely walled off.

As we’ve pointed out already, with a number of original shows and a growing subscriber base, Cinemax is more valuable to HBO now than it ever has been. That’s why the company is content with keeping it as its own channel, in order to generate its own source of revenue and connect with new audiences.

Whether a Cinemax Now-type service could stand on its own is unclear. The Knick is currently its only unanimously successful show with critics, and while it has a few interesting projects in the pipeline—including one from the creator of The Walking DeadCinemax still may not be a popular enough brand to sell internet-based subscriptions outside a broader cable package. It still relies on big brother HBO for a boost. For example, the series premiere of The Knick was rebroadcast by HBO and temporarily made available to subscribers on HBO Go (in addition to Max Go).

If HBO were to offer a Cinemax equivalent to HBO Now, it would have to be much cheaper—probably in the $5 range. At that price, the costs of partnering with distributors might be too high to justify the offering.

Still, HBO is serious about building Cinemax into the a premium channel on the same level as channels like AMC, FX, and Showtime. If the launch of HBO Now is successful, the company’s next challenge will be to figure out how Cinemax figures into the future of TV.

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