If you subscribe to HBO, get ready for some changes. AT&T, the new owner, has served notice that the premium content provider, acquired in the Time Warner merger, is going to have to contribute more to the bottom line.
The New York Times, which obtained a recording of a town hall meeting with HBO employees, reports John Stankey, now heading AT&T's new Warner Media division, is setting an ambitious goal of producing more content and attracting more viewers.
“It’s going to be a tough year,” Stankey said. “It’s going to be a lot of work to alter and change direction a little bit.”
Lately, HBO has been known for producing a limited amount of quality programming, like Game of Thrones and Westworld. HBO is most often marketed to cable and satellite TV customers as a premium tier.
Fighting for smartphone viewers
Going forward, Stankey told employees the network will have to change, producing more content to compete with providers that distribute through smartphone apps.
The AT&T executive set out the twin goals of expanding HBO's subscriber base and increasing the number of hours consumers watch HBO content.
“We need hours a day,” Stankey said during the presentation. “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.”
HBO currently spends about $2 billion a year on content, much of it critically acclaimed. Since there has yet to be any discussion of increasing HBO's budget – AT&T went significantly into debt to purchase Time Warner – the assumption is the network must do more with its current budget.
Could lead to a dip in quality
Both Stankey and HBO CEO Richard Plepler, who hosted the session, admitted that increasing the amount of content the network produces could lead to a dip in quality. But Stankey said producing more content is a key strategy in attracting more subscribers and convincing them to watch longer.
Stankey said HBO needs to change from being a boutique network, with an emphasis on its Sunday night line up, to “something bigger, broader.” He didn't say “like Netflix,” but there is little doubt that's what he meant.
Netflix has become the dominant streaming service with a massive increase in original content, not all of it award-winning. However, it spends more to produce it than other content providers.
In the session, Stankey signaled AT&T's willingness to invest more in HBO to help it compete in the ever-shifting media landscape.