Last month, AT&T acquired Time Warner, HBO’s parent company, for $85.4 billion. (Ohmigod so much money.) During the lead-up to the sale, AT&T pledged to take a hands-off approach to the network, arguably the crown jewel in Time Warner’s crown. But now that the sale has gone through, it sounds like things have changed
“We need hours a day,” AT&T executive John Stankey told 150 HBO employees at a town hall meeting at the network’s headquarters in Manhattan, according to The New York Times. “It’s not hours a week, and it’s not hours a month. We need hours a day. You are competing with devices that sit in people’s hands that capture their attention every 15 minutes.”
I want more hours of engagement. Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow’s world.
It basically sounds like Stankey, who now oversees HBO as chief executive of the newly formed Warner Media, wants the network to greatly expand its subscriber base, the number of hours its subscribers spend watching its shows, and of course, the amount of money HBO pulls in. During this meeting, Stankey shared the stage with longtime HBO CEO Richard Plepler, and this exchange stood out:
Stankey: “[W]e’ve got to make money at the end of the day, right?”
Plepler: “We do that.”
Stankey: “Yes, you do. Just not enough.”
Now, to be clear, HBO makes plenty of dough. It’s got 142 million subscribers around the world, 40 million of which are in the U.S. Over the past three years, the network has spent over $2 billion a year on its programming and raked in $6 billion worth of profit. But that’s not a lot compared to companies like Netflix, which plans to spend $8 billion this year. Indeed, although Stankey never mentioned the word “Netflix” out loud, it seemed to hang over the meeting, an unspoken goal.
NEW YORK, NY – NOVEMBER 28: CEO of AT&T Entertainment Group John Stankey speaks onstage during AT&T’s celebration of the Launch of DIRECTV NOW at Venue 57 on November 28, 2016 in New York City. (Photo by Dave Kotinsky/Getty Images for DirecTV)
To longtime HBO devotees, that may sound scary. HBO has become known for being very selective about where it spends its money, and for taking the time to develop shows right. The strategy doesn’t always work, of course, but it’s earned the network a sterling reputation among critics and in the creative community, not to mention a boatload of Emmys. Netflix, on the other hand, has more of a throw-everything-at-the-wall-and-see-what-sticks approach. It’s resulted in some hits, sure, but also plenty of misses.
Does Stankey want to turn HBO into Netflix? To be fair, it sounds like he’s mindful of the network’s legacy. “You’ve earned the dynamic amongst your customer base that when you put a new piece of content out there, people will try it, just because they trust you’re going to be putting something in front of them that they might like,” he said. “We now need to figure out how to expand the aperture of it without losing the quality.”
And for his part, Plepler seemed willing to roll with the punches:
I’ve said, ‘More is not better, only better is better,’ because that was the hand we had. 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.’
Stankey expects the next year to be a challenging one for the network (“It’s going to be a lot of work to alter and change direction a little bit.”), but also has plans to pump up HBO’s budget, so it’s not like they’re expected to increase quality and quantity with no extra help.
We’ve already heard that HBO will start production on a Game of Thrones prequel series this year, which would fall in line with this new strategy. Can HBO do more? Can they do it better? We’ll have to wait to find out. With any luck, this among content producers — Amazon also plans to get into prestige TV in a big way — will result in better shows for viewers.
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