HBO has more competition than ever for premium original content, but HBO CEO Richard Plepler will kindly remind everyone that HBO has a significant film business behind it.
During Time Warner’s third-quarter earnings call today, Plepler clarified HBO’s original content strategy going forward as AT&T’s $85 billion acquisition of HBO’s parent company looms.
“This gets obscured a lot. We have four Hollywood movie studios which make up more than 70 percent of viewing and 68 percent of on-demand viewing. It’s a huge part of our offering,” said Plepler, adding that 92 percent of HBO subscribers watch a movie at least once a month.
The question likely arose as HBO is dealing with competition from the likes of Netflix and Amazon, which are outspending the premium network stalwart on original content and producing higher volumes of programs and films because of it.
“More isn’t better. Only better is better. We’re not trying to just spend money. We’re trying spend money thoughtfully and to differentiate high-quality programming and build more addicts across our subscriber base. I like to think that our track record is pretty good at doing that over the last decade,” said Plepler. “If you look out at our program lineup going forward, you’ll see that we have every confidence that we’re going to continue that. I like our mix, I like our investments and I think what we’re putting together in terms of a value proposition is extraordinary.”
While HBO’s $2 billion content budget falls behind the $6 billion and $3 billion being spent by Netflix and Amazon respectively, the network is about to get an OTT distribution boost from AT&T’s soon-to-launch DirecTV Now live streaming TV service. Time Warner, along with about every other media company except CBS and Fox, and signed on to be a part of DirecTV Now’s 100-channel bundle which will start at $35 per month.
It’s unclear which networks from the content distributors involved will actually be included in that $35 price point. Barclays analyst Amir Rozwadowski pointed out that it’s difficult to know DirecTV Now’s position amid competitors like Sling TV and PlayStation Vue without knowing which channels will be offered at that base price.
“What we don’t know at this juncture is how many of its content partners, which channels and which feature sets will be included at the $35 price point. From our end, this makes it difficult to compare the service on a like for like basis vs. other OTT services available in the market,” said Rozwadowski in a research note.
For HBO, which has amassed a significant subscriber base for its HBO Now direct-to-consumer product, a product like DirecTV Now could potentially eat into the headway HBO has made in the OTT market.