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HBO Wanted More Leverage With the Cable Guys. Apple Is Happy to Help.

HBO Now is a big deal for more than one reason.

Peter Kafka covers media and technology, and their intersection, at Vox. Many of his stories can be found in his Kafka on Media newsletter, and he also hosts the Recode Media podcast.

Okay, Comcast: Your move.

That’s the message HBO CEO Richard Plepler was sending yesterday to the cable giant and the other big pay-TV distributors, when he announced he was going to start selling subscriptions with Apple.

HBO’s plan to sell a standalone version of the service — HBO Now, for $15 a month — using Apple as its exclusive digital launch partner is big news. Remember, though, that it’s only half the story: Plepler wants to use his new digital service to create a new revenue stream, and perhaps a life raft. But he also wants to use it as a lever to get more money out of his existing business with the pay-TV companies, which generated $5.4 billion last year.

Plepler talked about this in vague terms last fall, when he first said he would start selling HBO to people who didn’t have pay-TV subscriptions, and I went ahead and did the translation for the pay-TV guys: Every subscription you don’t help us sell is a subscription we can sell with someone else, on the Web.

Now he is being more explicit about it himself. When I talked to him yesterday, Plepler laid out his pitch to pay-TV providers: Sell HBO Now along with your broadband subscriptions, and then let’s also work out better terms for our conventional distribution deal.

Typically, pay-TV companies get about half the subscription price for each HBO subscriber, but the bigger issue is how the pay-TV guys market HBO. They tend to only make it available to subscribers who buy into a higher tier of service, limiting the pool of people who can pay for the premium channel. HBO, of course, would rather be marketed to every possible subscriber in every tier of pay-TV service.

Here’s the carrot part: “Nobody is doing us any favors launching an HBO Now over-the-top product in their broadband-only services but instead choosing to enhance their own business … we’re trying to make the logical argument that this is an additive proposition.”

And here’s the stick: “Now — if you think we’re going to get stuck at the door and not be able to have maximum flexibility in growing our brand — that, I’m afraid, is not a tenable proposition either.”

The flip side of this is that Plepler is selling HBO Now via Apple first because he hasn’t been able to get the Comcasts* of the world to see things his way. It’s possible that he’ll bring a couple on board before he launches next month, but my understanding is that he’s not close with most pay-TV providers.

And the cable guys also have their own levers to pull: If they want to punish Plepler for selling on the Web, they can pull back on the marketing they do for HBO — though that damages them, too. It’s a pretty good standoff, and up till now it has all been theoretical. Now we get to see what happens in the real world.

* Comcast owns NBCUniversal, which is a minority investor in Revere Digital, Re/code’s parent company.

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