By Jim Sabataso
HBO was always something different. The premium cable channel has told us as much over its 45-year history with its haughty tag line, which boasted, “it’s not TV.”
The business model placed quality over quantity, devoting only a few hours a week to original programming. Unburdened from the commercial advertising constraints and censorship of basic cable and broadcast networks, it took risks and let the creative process thrive.
The results spoke for themselves. HBO has the shows to back up its swagger. Series like “The Sopranos,” “Six Feet Under,” “The Wire,” “Curb Your Enthusiasm,” “Deadwood,” “Game of Thrones,” “Veep,” “Girls,” “Big Little Lies,” “Westworld” were award-winning, buzz-worthy series that made appointment television a thing and ushered in the “Golden Age of Television.”
But, in a post-Peak TV world where streaming video services are rapidly redefining the media landscape and flooding our screens with more and more content, HBO’s boutique model isn’t as sustainable as it once was.
John Stankey, newly minted CEO of Warner Media — the massive conglomerate born of the recent merger between AT&T and Time Warner — made that clear recently in a closed-door town hall meeting. Speaking to 150 HBO employees at the network’s Manhattan headquarters, Stankey explained the need for more “hours of engagement.”
“It’s not hours a week, and it’s not hours a month. We need hours a day,” he said. “You are competing with devices that sit in people’s hands that capture their attention every 15 minutes.”
Hours of engagement matter. More engagement means more user data, which means giving viewers more of what they like.
Currently, HBO’s programming is confined to Sunday nights with a handful more hours spread across the rest of the week. Even with so few hours of original programming, HBO has proven itself to be successful and popular. The network has 142 million global subscribers and earned $6.3 billion in revenue in 2017. But, while the channel makes money, in Stankey’s eyes, it’s “just not enough.”
Stankey may not have mentioned Netflix by name, but it was clearly on his mind. In 2017, the streaming giant earned a whopping $11.69 billion in revenue, and topped 130 million global subscribers in the first quarter of 2018. Despite being one million customers below expectations, that’s still nothing to sneeze at.
Even on the awards front, Netflix is giving HBO a run for its money. The streamer, which has yet to take home an Emmy Award for comedy, drama or miniseries, beat out HBO for most Emmy nominations this year with 112 to HBO’s 107, breaking HBO’s 17-year streak as top nomination getter.
That strong showing is a result of volume. If HBO’s programming model is an eye dropper, Netflix’s is a firehose. As Netflix continues to flood the market with more and more new original programming, that competition is only going to get tighter. Netflix is projected to spend $12-13 billion developing original programming in 2018. By contrast, HBO spent $2.5 billion in 2017.
Stankey’s message was clear: If HBO wants to continue to be a major player, it will have to act more like the streaming video service behemoth. That means upending the channel’s boutique model and turning out a lot more content.
While much of the discussion surrounding Stankey’s meeting with HBO has put the two parties at odds, there is less light between them than some want to believe. HBO chairman and CEO Richard Plepler, who has been with the network since 2007, may be proud of his network’s reputation, but he, too, sees the writing on the wall, and is likely on board as long as Stankey is willing to throw AT&T’s resources (e.g., user data and capital) behind it.
“I’ve said, ‘More is not better, only better is better,’ because that was the hand we had,” he told Stankey, adding, “I’ve switched that, now that you’re here, to: ‘More isn’t better, only better is better — but we need a lot more to be even better.’”
But, as culture critic David Sims of The Atlantic rightly points out, “the idea that numbers alone will drive good or popular art is ludicrous; Netflix has made plenty of shows that haven’t hit the mark with audiences, like any other network.”
HBO’s deliberate pace and careful creative process has yielded some of the best television in history, and a hit-to-miss ratio that is rather remarkable given its slight output relative to both Netflix and broadcast television. For every biff like “John from Cincinnati,” there’s “Veep,” “Curb,” “Game of Thrones,” “The Wire,” “Barry,” etc.
Netflix, on the other hand, is far less concerned with prestige programming than it is with churning out a lot of middling content. For all its proprietary user data and analytics, the results are wildly uneven. Sometimes it strikes gold with critical and crowd-pleasing hits like “The Crown,” “Master of None,” “GLOW” and “Stranger Things.” Other times, it overplays its hand, dealing out flops like “Girlboss,” “The Ridiculous 6,” “Disjointed,” “The Ranch” “Bloodline” and more.
While Stankey says the HBO brand needs to be broader in order to compete, he assured employees he doesn’t want to sacrifice quality. Essentially, he wants the network to maintain the same calibre of programming, just more of it. Even with Warner Media’s vast arsenal of resources behind it, balancing quantity and quality is no simple task.
Stankey warned employees the process will come with growing pains — he actually compared it to childbirth (which, no) — but argued it’s a necessary process that will get them to where they need to be.
It’s easy for lovers of prestige television to look at this development and lament the demise of HBO. Indeed, it may well be. Why mess with a good thing to keep up with a streaming juggernaut like Netflix? Why isn’t niche, prestige television good enough anymore?
The simple fact is, the field is growing. It’s not just Netflix HBO has to contend with. There’s Amazon and Hulu. Apple is also looking to get into the streaming game. In the coming year, Disney, another media powerhouse, will be launching its own streaming service. And, if the Fox-Disney merger wins regulatory approval, the House of Mouse will only become more formidable. HBO needs to show up and compete if it wants to survive.
But all is not lost for the HBO we know. If Stankey employs a light touch and allows Plepler and co. to grow in a manner true to the HBO’s bespoke style, both shareholders and viewers will benefit. The network has always dabbled in news, documentary and sports programming. By going deeper on those offerings, it could add new content that would broaden the brand. It would also help mitigate the flow of scripted programming and the inevitable flops that will result from increased development.
The HBO brand has cachet. It’s exclusive, it’s special, it’s “not TV.” It can still be all those things moving forward if it remains true to that vision. But time will tell if it can “expand the aperture of it without losing the quality” as Stankey desires, or if it will just become yet another streaming-content farm in the new media landscape.