AT&T’s Troubling Plan to Change HBO
theatlantic.com
theatlantic.com
For as much as anybody here likes HBO, the diagnosis Stankey (and, I think, Sims) has of it seems apt. HBO has a sterling reputation. But so what? Even today, they're no longer distinctively good; in fact, there are basic cable channels (AMC and FX) that have given HBO a run for its money.
Does anyone really believe that HBO is going to outcompete Netflix on original programming over the long run? Netflix introduces new programs like Google introduces new chat programs. It's not even an event for them. They just randomly drop them in the middle of the week, as if they don't have time even to promote them. Have you ever started an episode of Jessica Jones and had to wait 2 minutes for them to promo the next season of Mindhunter?
And that's just Netflix. Amazon will eventually figure TV out. Disney controls Hulu now. Apple is making a move into online video.
Meanwhile, after Game of Thrones ends, what's HBO got for tentpole series? Westworld? Besides the fact that it won't be airing again for 2-3 years, its renewal was not even a certainty.
I think Stankey is right. If HBO is going to be a factor long-term, a thing people pay substantial amounts of money to retain access to, it is going to have to look more like Netflix and less like a thing you pay your cable company extra for. HBO could afford lulls of a year or two taking flyers on just 1-2 new prestige series (Carnivale; Newsroom; Vinyl). But premium cable is over, everything is going to be disintermediated, and HBO will need to justify demanding $15/mo directly from people. I'm not sure it's worth that today.
Personally I think the de-bundling of cable TV and the getting rid of ads (i seriously never understood how we can pay for cable tv and still be forced to watch ads) is a great way for the market to move forward. It shows you that the consumer does ultimately get the final say so.
However, I do not believe that costs are getting cheaper. If anything they are just going to keep going up and up.
Also the crazy level of competition going on right now to produce "service selling" original content, is in my views creating a situation where we keep getting a sub par product out of the deal.
Each has produced a couple series ever of the quality that HBO has a few of at any given time. They aren't playing at the same level.
> Does anyone really believe that HBO is going to outcompete Netflix on original programming over the long run?
Yes.
> They just randomly drop them in the middle of the week, as if they don't have time even to promote them. Have you ever started an episode of Jessica Jones and had to wait 2 minutes for them to promo the next season of Mindhunter?
Netflix promotes more heavily in the app than most other streaming g services do; I actually find this both more intrusive and less effective than pre-roll promotions like HBO does.
> Meanwhile, after Game of Thrones ends, what's HBO got for tentpole series?
Succession, The multiple (IIRC, 5) GoT spinoff series that are already confirmed in the works, potentially with the first airing as soon as 2020, the Watchmen series they are rumored to be picking up...
> But premium cable is over, everything is going to be disintermediated,
The trend seems to be more streaming services offering premium add-ons like HBO, and away from “streaming means the end of the premium cable model” that was more defensible a claim a couple years ago.
During that time, HBO ran Curb Your Enthusiasm, True Blood, Big Love, Boardwalk Empire, The Newsroom, Treme, and (at the end) Game of Thrones.
Meanwhile, AMC ran Breaking Bad, Mad Men, Hell On Wheels, The Killing, and Walking Dead, plus The Prisoner and Hustle.
If you ranked those shows by importance, AMC would have played HBO to a draw in the top 10.
Succession is barely drawing half a million viewers, for what it's worth. If HBO is betting their future on Succession, I think we can call it.
While for my tastes AMC is nowhere near HBOs level, I take issue with the idea that something I pay for by subjecting myself to commercial advertising should not be of equal quality to something I pay for in equal (or lesser) value in currency.
There are a lot of those nowadays. Have you noticed too?
https://www.youtube.com/watch?v=JiE6gI0fYuA
Netflix introduces new programs like Google introduces new chat programs. It's not even an event for them. They just randomly drop them in the middle of the week, as if they don't have time even to promote them.
It looks like Netflix is trying to use the same methods and tactics as YouTube for promoting content by algorithmically presenting content to users. Is Netflix changing itself into an "ecosystem" for show starters and show runners? That would be a nice way to outsource the risk.
Amazon will eventually figure TV out.
Amazon is well positioned to do the same.
But premium cable is over, everything is going to be disintermediated
The same needs to happen to news!
Would I rather own AMC than HBO? No (FX, though, different story). But AMC is a basic cable channel! Breaking Bad and Walking Dead are both much bigger deals than anything HBO has done in the last 10 years except for Game of Thrones. If we have to argue about which is the more important channel in 2018, HBO's model isn't working.
Yea, and they both have equivalent staying power.
* Mindhunter
* Making a Murderer
* Orange is the New Black
* House of Cards
* Unbreakable Kimmy Schmidt
* BoJack Horseman
For better or worse, all of these shows have as much staying power as the median HBO show, and most of them have more cultural currency. However good Barry might have been, TV critics weren't burning multiple columns talking about it.
And again, the idea that HBO just needs to compete with Netflix isn't my whole argument. Neither HBO nor Netflix picked up The Americans. HBO got outbid for a prestige show last year --- by Apple. The problem is that the prestige TV space is crowded.
Meanwhile AT&T essentially only competes with Verizon, and does that primarily by offering the exact same services -- not exactly revolutionary, Harvard Business School Case Study stuff.
What has AT&T done in the last 20 years that was original? Mainly its operating business strategy is to raise prices as a regional, quasi-monopoly.
But sure, it's the (not highly paid) HBO employees that have to work harder, emulate those brilliant AT&T execs and their super original business growth strategies.
Showrunners come to them with raw ideas and the first step is to filter out most of the bad ones. Then there's writing, casting, budgeting, filming, editing, marketing...you make it sound like HBO is a bunch of cardboard cutouts and they just order up completed shows from Amazon.
My point is AT&T has done practically zero creative or truly innovative in the last 20-25 years, it's comical to listen to a career AT&T suit lecture HBO staffers (who excel in a field far more difficult than his) about how they need to work harder.
Its hard to imagine a better way of convincing all your best employees to start thinking about switching jobs.
Wiki says "HBO is the oldest and longest continuously operating pay television service (basic or premium) in the United States".
I'm not under estimating HBO. like the rest of the fear mongering I hear from my friends :)
AT&T doesn't' have what it takes to ruin it.
Some of what they do is great. Some is biased in a disturbingly pointed way.
At some point those licenses will expire but this illustrates the "innovator's dilemma" as applied to HBO.
They have a good business of selling cable subscriptions for new stuff, licensing their past shows to Amazon, Hulu and other willing buyers and selling on-demand access via Apple, Amazon etc.
Now they need to compete with Netlifx, which has a large catalog of licensed, popular shows from all over and their own exclusive content.
To compete with that HBO would have to drop revenue from licensing (there's less reasons to pay for HBO if I can get a lot of their good stuff elsewhere)
Their cable subscriptions are probably going to decline no matter what. Cable subscriber count is on a steady, 6 year decline (http://www.businessinsider.com/cable-tv-subscriber-losses-q2...) despite being propped by internet + cable bundles.
That decline is accelerating i.e. every year more people are cancelling cable as a percentage. If that continues, it'll be a bloodbath. If the decline stops accelerating, it'll still be bloodbath, just later. I don't see a scenario in which cable starts growing again.
Netlifx model is easy to explain but almost impossible to replicate.
The model is: get so many subscribers from all over the world paying you relatively small amount that you'll be able to outspend any other company in quantity of TV/movie exclusive content, thus making it even more likely to get new subscribers.
This is "rich get richer" model and Netflix is already the richest.
People will be willing to buy 2-3 such subscriptions so that's how many winning slots there are.
So HBO better fight hard for that 2nd or 3rd position, but unfortunately just like BlockBuster or Borders had a good business until they didn't, HBO might not do enough to compete.
And they know how. Remember all those independent DSL providers, back around the millennium? I had one for years, then intermittent failures set in. After months of debugging, the cause was traced to misconfigured AT&T equipment in the local office.
It's as easy and untraceable as deprioritizing Netflix-sensitive operations tasks.
Oh yeah, I still have to pirate the HBO shows I want to watch. Even the Netflix catalogue seems to be shrinking rather than growing here outside of the US. Apparently you can get Netflix to show more stuff here by changing the language on the web interface because they only show me stuff that has dubs for my language. Can't do that in-app though.
Uh, hello, I understand English well enough to be able to watch your fucking show in English, why does my room mate have to call your support to figure this out?
So now they want to turn HBO which is even worse than Netflix into Netflix? Cool, I'll still be pirating.
yawn
HBO makes a few REALLY good series. That’s what they do. They are not setup to produce 10x as much content. If they do they may not have the people who can do that with reasonable quality. They’re used to polishing gems.
You wouldn’t buy Nintendo and order them to make a console more powerful than the XBox One X. That’s not what they do.
This probably won’t go well.
HBO used to be the pinnacle of stand-up shows, but Netflix has taken that torch now it seems.
For comedy series they do well though. Curb, Silicon Valley, VEEP, Last Week Tonight, Eastbound & Down, and back in the day Larry Sanders, Mr. Show, Ali G and more.
They always deliver with great shows non-comedy as well: Band of Brothers, Boardwalk Empire, The Wire, Sopranos, The Night Of, GoT, Big Little Lies, True Detective and on and on, hard to find this level of quality and creator freedom that allows that. Netflix definitely giving HBO a run for their money in quality and creator freedom, hard to imagine AT&T even giving creators the level of control HBO and Netflix have.
But also, you can't look at those shows in isolation. Compare them to Netflix's properties. Stranger Things is as big a deal as literally anything HBO has launched in the last decade, including Game of Thrones (I really want to believe that HBO is kicking themselves for not buying the script for that; it was shopped to them). For any given HBO 30 minute comedy, Netflix has probably launched 3 equally credible comedies.
The very best, most important 60-minute scripted dramas in the past decade have not as a rule, with the exception of Game of Thrones, been on HBO. If AMC can do Mad Men and FX can do The Americans, there is no reason to believe that Netflix can't do equally well just by pouring investor dollars into acquiring shows. At the end of the day, that's what these businesses do: pick production companies to fund, fund them, and then distribute the results.
You're avoiding some incredible shows.
At any one time HBO has about 3 to 5 shows a year that I like. Netflix seems to have about the same ratio. Netflix’s firehose seems to ensure they have at least a few shows most people like. Without the cable TV lock-in HBO is going to have to do something to convince people to keep payng more for less.
Season 5 of The Wire was just about a decade ago, and it was abbreviated because it didn't get great ratings.
Carnivale was cancelled for low ratings after its second season. I'm not saying it's bad (it was a mess, though). I'm saying that HBO has to do more things like Carnivale, on a much faster schedule, if it's going to keep up with Netflix.
But HBO used to have buffers for this stuff: a captive audience of cross-subsidized cable subscribers that were paying for HBO as a part of their TV package, and a competitive status as basically the king of the hill for prestige scripted television. They could take flyers on John From Cincinnati and Carnivale and wait for the next tentpole --- the next Game of Thrones or Sopranos or True Blood.
But both of those buffers are going away. Cable TV packages are going the way of Blockbuster Video. If you want subscribers, you're going to have to get them to sign up, in a crowded market, and bill them directly. And HBO isn't even close to the only game in town for prestige television. Even Hulu is competitive here; arguably, The Handmaids Tale has done as well as any non-GoT property HBO has launched in the last couple years.
To me, what this suggests is that for HBO to be competitive, their model is going to have to look more like Netflix's: they're going to need to fund and develop a lot more properties, rolling the dice more often until they can find a bunch more tentpole shows. Which is all the article really says, too.
But paying $10 a month for a “throw stuff at the wall“ approach of TV? Why not just subscribe to Hulu.
Meanwhile: if "throw stuff at the wall" is Netflix's model, go look at Netflix's numbers. They're not hurting. Their model works; they stand on their own two feet. We actually don't know if HBO's model works: they're cross-subsidized not just by cable companies, but also by their corporate owners. They were one of the most important players in the old TV model. It remains to be seen how important they'll be in the new model.
I think it would be hard to argue that Netflix was less important than HBO in the modern TV marketplace.
Except Nintendo could do that and be fine. Probably not, but if the third party is strong.
This is more like telling them to start shoving out a mario game twice a year.
I believe otherwise. Most of Nintendo's marketing and appeal is based around gameplay and nostalgia; not graphical prowess.
A Nintendo more powerful than one X would cost more since Microsoft amortizes some of the cost over Live services and in-store purchases whereas Nintendo focuses on 1st party games with no recurring revenue. Price elasticity is perhaps most visible in the console arena where consumers are extremely sensitive to upfront costs.
Sure they could get all the multi-platform AAA games, but then they would just be another MS. There wouldn’t be anything to distinguish them.
Except their terrible online services.
Their games would have to get better (graphically) to fit on the console as best-of-breed, which would dramatically increase their development cost. So we wouldn’t see the wonderful variety and depth of first party releases from them anymore.
And as history has shown both Microsoft and Sony have HUGE budgets and can afford to lose a few generations to stay in the game. Nintendo can’t.
David go from special player on this side who’s doing great to a nobody. Does anyone really think a lot of parents are going to spend $600 to buy their kids the next Mario game?
It’s true that today’s Nintendo can get away with lower specs, largely due to their high reliance on first-party exclusives – both because their titles tend to use cartoony graphics which don’t benefit as much from increased processing power, and because their status as exclusives creates differentiation, a reason to buy Nintendo’s console over the others even if it doesn’t win on specs. And in exchange, Nintendo is typically able to sell their consoles at a lower price point.
But this strategy has its costs, as Nintendo learned with the Wii U. In the original Wii era, it was completely unfeasible to port titles designed for PS3 or Xbox 360 (or PC) to the Wii, because it was far too underpowered (single-core 729MHz CPU, 88MB of RAM!). But it had a large selection of third-party titles anyway, including the big brand names, because the Wii sold so many consoles that third parties were incentivized to develop games (or versions of their games) specifically for it. On the other hand, the Wii U was if anything slightly less far behind than its contemporaries in specs, but still not close enough for successful ports of AAA titles. And since it sold much less, third parties didn’t target it nearly as much as a primary platform, either. The result was a serious dearth of third party titles – which further reduced console sales, a vicious cycle.
The Switch seems to be at least somewhat of a different story. For one thing, as a portable console it’s a successor to not just the Wii U but also the 3DS – which has always been highly popular. And its sales to date have looked more like the Wii’s than the Wii U’s. It also benefits from a relative stagnation in processing capabilities of its competitors, which has given it a bit more room to catch up (even though, as a mobile Tegra based design, it’s still far behind). But it’s still going to suffer a lot from not having the usual complement of AAA games that are on every other system. For most hardcore gamers (which is not Nintendo’s core demographic but nevertheless a big one), it’s a second console, not a first.
If it were just a matter of price, I don’t think it would be all that surprising or unreasonable for Nintendo to come out with an equal-spec console next time around. Maybe not the most likely possibility, but not super unlikely either. And there would be a clear sales pitch. Your $600 figure is an exaggeration – Xbox One X launched at $500, PS4 Pro at $400; and the Switch at $300, only $100 cheaper than the latter. So it would be more like, $400 to buy a console that has the new Mario game (and Zelda and Smash Bros. and all of Nintendo’s other games)... plus CoD, whatever comes after Skyrim, and all the other cross-platform stuff that appeals to kids. Or you can pay the same price for a competitor’s console with the same cross-platform games, no Mario, and far fewer exclusives overall.
In reality, though, it’s not just about price but also portability. While it’s just a guess, I think Nintendo’s next console will be a “Switch 2”, with the same hybrid form factor, and probably a similar NVIDIA architecture to allow backwards compatibility. If so, while they might be able to narrow the gap some more, they won’t come close to getting rid of it, regardless of price point.
HBO can be a $80 billion premium product company and co-exist with Netflix, versus $150b for Netflix. If AT&T is smart at all, they'll happily keep their Ferrari instead of trying to become GM/Ford/Honda/whatever and destroying the brand in the process.
Simply put, there will only be one Netflix, if HBO goes the clone route they will die. If HBO stays HBO, Netflix can't kill them.
AT&T needs a crooked FCC to pass laws in order to make their exiting business model viable, and they have something everyone needs Internet and Cell phone, and they are basically only 1 of 4 players.
First, it used to be the only source for intelligent programming. Now I can get as good or better content from Netflix, Amazon, and smaller arthouse-oriented channels. HBO doesn't stand out to me.
Second, streaming channels are a la carte, not bundled, and I'd have to pay cable TV-sized bills to subscribe to 100 channels. HBO doesn't seem to offer enough to be worth a separate subscription.
Finally, the lack of an integrated listing UI means that I have to open the HBO channel to see what's playing there. It's rarely worth the effort with so many other options that have more content.
To be honest with you, I find Amazon’s content to be...well, bad. On the other hand Netflix has a few good shows, but the company is clearly prioritizing quantity over quality. Not only does its content not have the awards or acclaim HBO’s garners, but it just churns out forgettable movie after forgettable movie. A lot of Netflix’s content is becoming the new “direct to TV” movie.
HBO’s approach is to produce character-driven and thought-provoking programming which is ahead of the curve. That’s not everyone’s cup of tea when it comes to entertainment, but they naturally achieve greater critical acclaim and cult status. It’s hard to think of a way most of Netflix or Amazon’s content can be compared to HBO’s except, “It’s entertaining.” In what way do you see Netflix or Amazon innovating? For what definition of “good” do you find your favorite Netflix and Amazon shows comparing favorably with HBO’s?
For a while I held high hopes of Netflix becoming a new HBO because House of Cards was exceptional. But they didn’t exactly make that a trend. And while we’re on the subject of UI, Netflix is so hellbent on having me binge watch the day away that I can’t hover over a title for more than 1 second without it blaring a crappy trailer at me. The native Netflix experience (LG TV, AppleTV) has me scurrying from title to title like a mad squirrel hoping to read a description without triggering the trailer.
And second, because as drama “Show Me a Hero” excels. Younger viewers may find this hard to believe, but once upon a time American studios made films for adults, with nary a dinosaur, superhero or hunger game in sight. Directors such as Elia Kazan, Sidney Lumet and Spike Lee dealt with serious moral questions, and made urban realism riveting. Messrs Simon and Zorzi are their successors, but their work is richer, more sophisticated—and better.
I think the biggest problem is that the Marvel cinematic universe seems to have better acting, better writing, superior interconnectedness overall and stakes that are well calibrated to its cast of heroes. In contrast, I find most of the characters' hyperfocus on specific neighborhoods in Marvel's Netflix shows to be frankly ridiculous and annoying. I also find myself wishing the main characters would just kill the villains a few episodes into each series. It boggles my mind how much waffling and angst goes on.
As a followup to your last comment though, my point had nothing to do with HBO becoming Netflix. I don't even think HBO should try to become Netflix at all. I would prefer for HBO to remain the curated content space that it is, precisely because I'm concerned with the quality of content. Strictly speaking, the ratio of quality content to junk on HBO is far, far higher than Netflix's. It's not really about HBO or Netflix being more successful in becoming the other, it's about quality. Regardless of whether or not HBO is close to becoming Netflix, Netflix is so far from becoming HBO I don't even think they could recognize an interstate map outlining the route.
I think this misses the forest for the tentpoles. Right now HBO's original programming is one episode per week of: Sharp Objects, Succession, Last Week Tonight, Vice and a Bill Maher special. Yes I think Netflix's better new content competes with that. Netflix supplements that with a huge array of quality third party tv shows. Non-English content is another set of moats for netflix, I wouldn't be shocked to learn that Netflix Japan has more hours of original-ish (lots of it is co-produced) content per year than HBO. Korean and Spanish might be behind but not too far and Chinese and Hindi are just a couple years away.
I'm not really talking about how large of a selection either platform has, either. I don't think they should even directly compete. HBO's niche is precisely that its new content is generally of a higher bar than Netflix's (or other platforms).
Strictly speaking, Netflix simply doesn't have a show like The Wire or The Sopranos. Those are cult phenomenon (and deservedly so). On the other hand, HBO also offers greater freedom and creative control to innovate in narrative storytelling. House of Cards fourth wall breaking is the closest I think Netflix has come to this (and after that maybe Stranger Things). But the gigantic ensemble cast of Game of Thrones and the heavy use of non-linear timeframes in Westworld are somewhat unimaginable in hithertoseen Netflix content.
I don't think you can avoid the quantity argument, especially if you're going to hold up The Wire and The Sopranos, two shows that wrapped years before Netflix even got into the content game. Yes Netflix doesn't have any original content I've seen as good as The Wire or The Sopranos but they pair their many A- and B+ shows with the best of AMC (Breaking Bad, Mad Men) and British TV (Black Mirror, Peaky Blinders, UK Office), along with most of FX and Showtime's catalog and a large number of current and classic standouts (Twin Peaks, Fawlty Towers, Arrested Development, Cheers, etc.). If you want to watch high quality TV, there's a good argument that Netflix is absolutely where it's at. And if you're also interested in any kind of genre/non-highbrow TV, Netflix absolutely swamps HBO in pretty much every category.
Silicon Valley, Westworld, Vice, and Game of Thrones are worth it plus a steady stream of new movies. Not to mention their older shows. HBO’s quality is much higher than Netflix and Amazon doesn’t even compare.
I used to subscribe to HBO but now only do so when their big drama exclusives are in season (GoT and WW).
When it comes to in house content Netflix's best attempt so far (House of Cards) barely reaches the quality level of HBO's B-roll.
I could probably lose Netflix or Prime without missing a beat, but I will be chagrined if ATT fucks with the format of HBO Now/Go.
And if you tell me that The Sopranos wasn't realistic, I'd say you weren't paying attention to the news in the NYC metropolitan area. Many/most of the show's plots were, at the least, "inspired by actual events".
You can always watch the Hallmark Channel on basic cable. Not too many cuss words there.
Whatever story it had was absolutely drowned out by dialogue written by prepubescent boys who just learned the word "fuck" for the first time.