AT&T sets out to destroy everything good about HBO

AT&T wants to overhaul HBO, says it isn’t profitable enough

I'll let John Stankey, new CEO of the new Warner Media division, dig his own hole:

The talk, held at HBO headquarters in New York City, was hosted by HBO CEO Richard Plepler. Both Stankey and Plepler acknowledged that producing more shows could lead to a drop in quality, but they said they hope to produce more without sacrificing HBO's standard of excellence.

[...]

HBO must produce more content, "transforming itself from a boutique operation, with a focus on its signature Sunday night lineup, into something bigger and broader," the Times wrote in a paraphrase of Stankey's remarks.

[...]

"We need hours a day," Mr. Stankey said, referring to the time viewers spend watching HBO programs. "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."

[...]

"Think about things like Game of Thrones," AT&T CEO Randall Stephenson said at a telecom conference in May 2017. "In a mobile environment, a 60-minute episode might not be the best experience. Maybe you want a 20-minute episode." Instead of showing full-length episodes on all devices, it might be best to "curate the content uniquely for a mobile environment."

[...]

"Also," Mr. Stankey said, "we've got to make money at the end of the day, right?"

"We do that," Mr. Plepler responded, to scattered applause.

"Yes, you do," Mr. Stankey said. "Just not enough."

"Oh, now, now, be careful," Mr. Plepler said.

HBO has made $6 billion in profit over the past three years, while devoting $2 billion to programming. That seems like a pretty good return on investment to me. Not to mention the dozens upon dozens of awards that HBO programming has won for the network.

HBO has 40 million subscribers in the US and 142 million worldwide, but Stankey said that AT&T intends to make HBO "a much more common product."

I'm tempted to write a paper letter to Stankey's boss at AT&T, but it seems pretty clear that he doesn't know anything or care about HBO either. If Stankey starts executing on his vision of HBO programming with advertising targeted at mobile devices, I can at least vote with my wallet. Maybe I'm only 1/40 millionth of their revenue, but it's what I can do.

We're drowning in amazing television.

If ATT wants to kill the goose of the Golden eggs, let them.
All the HBO talent have no less than 20 options world wide to take their skill of the trade and make att's head spin.

Apple and Disney will gobble up executives faster than ATT can try to excersice their non compete clauses.

Bring.
It.
On.

I'd have more sympathy if this wasn't exactly what HBO did to Sesame Street. Cut the running time in half, retooled to be more appealing to mobile device users, ended contracts with long time talent.

Who the hell wants to watch TV shows on their phones?

LeapingGnome wrote:

Who the hell wants to watch TV shows on their phones?

People with really long commutes and unlimited data plans.

Yeah, Stankey is clueless, but it doesn't matter. If he destroys HBO, there are plenty of other services that will be more than happy to produce the quality programs that we all love... and I can drop my expensive HBO subscription and save some money too!

JeremyK wrote:
LeapingGnome wrote:

Who the hell wants to watch TV shows on their phones?

People with really long commutes and unlimited data plans.

Or people who are able to download shows for offline viewing (which HBO doesn't allow).

It seems real weird to pay a ton for an organization because they're doing things well, then immediately tell them to change everything they're doing so they can do the same thing but MORE.

It just sounds like AT&T acquired HBO to attempt to boost the number of subscribers to AT&T, not to operate it as an alternate revenue stream for a larger media company. At least that's my read with the "let's make HBO's programming more appealing to a mobile audience" line. I could them exempting HBO programing from data counts if you're an AT&T mobile subscriber.

Stengah wrote:

I'd have more sympathy if this wasn't exactly what HBO did to Sesame Street. Cut the running time in half, retooled to be more appealing to mobile device users, ended contracts with long time talent.

...and look what happened to Sesame Street.

"Surely if we do the same thing again, we'll get different results!"

AT&T sets out to destroy everything good about everything

Maybe they can force HBO to shoot all of its shows vertically, too. You know, for teh cell phonez.

JeremyK wrote:
LeapingGnome wrote:

Who the hell wants to watch TV shows on their phones?

People with really long commutes and unlimited data plans.

Targeting a very small niche market is not a way to expand the business...

How about getting HBO to start showing content in its original aspect ratios and I might actually use it for more than GoT and John Oliver.

Cable is crumbling. Everything that HBO has done to become a behemoth no longer applies. Netflix and Amazon are eating its lunch.

I'd say adding 4K and HDR content would be just as important as developing larger number of TV series.

Is that really true? HBO's making a pretty solid amount of money. They've developed enough of a reputation for producing quality content that there's a default level of anticipation built into everything they do. They've got enough of a library that subscribing to HBO Now isn't a crazy thing to do. Yeah, Amazon and Netflix beat the hell out of their subscriber numbers, but if you're still making a healthy profit margin, is that really a huge problem?

I'm still unconvinced that 4k and HDR are necessarily big drivers for mass market appeal. Yeah, more people are getting 4k TVs by default, but are a lot of those people willing to pay extra for 4k or HDR content?

As cable numbers continue to dwindle, HBO is reliant more and more on just being a streaming service. From a new content perspective, Netflix and Amazon are killing it, and Hulu, while weaker on content, has Network TV locked down as an extra service that HBO doesn't provide.

At some point, HBO's premium identity just isn't going to hold up. Are 4K and HDR massive drivers at this point? No. But it's just another chink in HBO's armor when their three biggest competitors do. HBO is no longer fighting to beat Showtime, Cinemax, and Starz, it is trying to avoid being them.

Chaz wrote:

I'm still unconvinced that 4k and HDR are necessarily big drivers for mass market appeal. Yeah, more people are getting 4k TVs by default, but are a lot of those people willing to pay extra for 4k or HDR content?

Yeah, I have a 4K TV, but pretty sure that Netflix and my ISP conspire to make sure that I'm only ever watching sub-HD streams on it.

And it's fine like that, honestly, for 99% of content. It's only the very occasional thing that I actually require bleeding eyeball clarity for (e.g. Planet Earth 2).

LeapingGnome wrote:
JeremyK wrote:
LeapingGnome wrote:

Who the hell wants to watch TV shows on their phones?

People with really long commutes and unlimited data plans.

Targeting a very small niche market is not a way to expand the business...

Young, people watch everything on their phones. I don't get it but they do. A friend of mine who works in 3D manufacturing had to ban employees watching movies / shows on phones because it was becoming a problem. Similar thing with my buddy who works at Logan airport as an airplane mechanic. They use their data instead of of free wifi because the possibility of getting tracked while watching on the job.

My daughter and her roommates have a TV, but it’s only for gaming. All of their “TV” viewing is done via laptops, tablets, and phones.

Yes laptops and even tablets I get. Phones though, no just too small.

It really sounds to me this guy thinks HBO's purpose should be to increase AT&T Wireless business, like Kehama said. It is a means to an end that does not align with HBO's business of making subscription-worthy content.

If you were looking for criticisms of late capitalism, I imagine you don't need a gift receipt for "Company making 4 billion in profit is getting its 'lunch eaten.'"

LeapingGnome wrote:

Yes laptops and even tablets I get. Phones though, no just too small.

It really sounds to me this guy thinks HBO's purpose should be to increase AT&T Wireless business, like Kehama said. It is a means to an end that does not align with HBO's business of making subscription-worthy content.

Interestingly, I just met my wife for lunch in her building because the Gumbo food truck was there. As we were leaving the lunch room, I saw a woman eating her lunch alone, watching The Sopranos on her phone.

Not everyone wants to drag a tablet or laptop around. Regardless, everyone still seems to be ignoring that the business model HBO used to become so huge is crumbling. HBO dies without change. They may die anyway.

Chaz wrote:

Yeah, Amazon and Netflix beat the hell out of their subscriber numbers, but if you're still making a healthy profit margin, is that really a huge problem?

I think this is our problem; there was nothing (terribly) wrong with HBO. But now that's part of a bigger conglomerate, shareholders will not put up with it making one dollar. We need a 2 year plan plan to increase revenue to 4.5 dollars!!!!

I still think you guys are missing the bigger picture. Their revenue model is changing drastically because cable is losing subscribers every week. HBO has to justify a subscription in direct competition with Netflix and Amazon. HBO has some great programming. But Amazon and Netflix each have just as many great TV series, and probably several more.

HBO is a behemoth right now. Blockbuster was a behemoth, but the market changed and they never adapted. It's not much different than those that lamented Netflix changing course from mailing discs to becoming a streaming giant producing their own content. Adaptation does not always work, but failing to adapt always creates failure.

There's adaptation, Jayhawker, and there's management-induced suicide, and this sounds a lot more like the latter than the former.

Malor wrote:

There's adaptation, Jayhawker, and there's management-induced suicide, and this sounds a lot more like the latter than the former.

So you don't believe that the nature in which HBO acquires subscribers is rapidly changing?

Will it make you happy if we say you're right?

I don’t think the purpose of HBO should be to prop up AT&T mobile data plans.

Chaz wrote:

Will it make you happy if we say you're right?

Sure!

On the other hand, you could make an argument that isn't based on what you think HBO should be rather than what is in its best interests financially.

I guess I didn't realize this was an AT&T is ruining my childhood thread.

Carry on...

I don't have any insight into HBO's financials, so I don't have any insights into what's financially viable or not. They've been successful focusing on a small number of very high quality shows. They've branched out to offer their catalog via streaming without a cable sub. I don't know if they've been successful doing that, but it seems like a reasonable thing to keep doing.

What I don't want to see is AT&T push for quantity in the name of subscribers and have the quality drop.

I am not sure that the plan they stated will get them new views. It feels like they want hours viewed in the age of streaming where ads are seen as annoyances. So hours watched doesn't matter to Netflix as long as I subscribe unless they are running ads right?

It feels like the cable companies have no idea how to compete in the new market so they are turning a loved rts into a mobile port. It doesn't matter if everyone has a phone people will only buy your subscription if the content is good.