NEW YORK (TheStreet) -- Time Warner's (TWX) HBO Now standalone streaming app is the highest-grossing property on Apple's (AAPL) iOS property in its first full month, but industry consultants aren't exactly wowed.
"It's a relatively small opportunity at this point," said Jimmy Schaeffler, a senior analyst at the Carmel Group. "The service and the ecosystem is something that's a long ways away from where it should impact stock price."
Just a year ago, Time Warner shares skyrocketed on the news that Rupert Murdoch's 21st Century Fox (FOX) was offering its cable-TV rival a $80 billion buyout, then dropped when Fox abruptly withdrew the bid. But Time Warner investors have been reassured since October, when the maker of True Detective and Boardwalk Empire announced HBO Now, an over-the-top service to let viewers skirt pay-TV cable and satellite providers to stream their programs over broadband instead.
Shares of Time Warner have risen 22.5% since HBO Now was announced on Oct. 15.
But for a company of Time Warner's size, earnings shouldn't move unless Time Warner can get a double-digit market share lead over its nearest competitor, said Schaeffler, a video industry consultant.
"Today's subscribers are really fickle in terms of what they take and how long they take it," he said. "In order to see growth for a big company like Time Warner, you need long growth that's sustaining."
Even if investors see HBO Go as forward-thinking, the channel's history of users coming and going can mean less revenue, said Alan Wolk, a senior analyst with TDG Research. "People would subscribe when the Sopranos came out and unsubscribe when it ended," said Wolk. "I'm curious if we're going to see that kind of behavior again."
HBO CEO Richard Plepler has denied that the service is meant to lure would-be cord-cutters away from their cable and satellite subscriptions, saying it is geared to millennials and other folks that have never had a cord to cut. Since it's just one channel, the service is billed as a tidy addition to à la carte streaming services from Netflix (NFLX) to Dish Network's (DISH) Sling TV that are vying to offer slimmer alternatives to traditional pay-TV bundles. Sling also offers HBO as an add-on to its core package for an additional $15 a month.