Movie network tries to stand apart from Netflix with pickier
programming and more care for its stars
By Joe Flint
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (January 16, 2018).
When Netflix Inc. tried to woo comedian Jerrod Carmichael away
from HBO to do stand-up specials, HBO executives swung into
action.
They told Mr. Carmichael that Netflix, which is bingeing on TV
production and has a massive stable of content, wouldn't be able to
tend to Mr. Carmichael properly.
"If you have 50 kids, you're not going to every soccer game,"
HBO Programming President Casey Bloys said in an interview. "We go
to every soccer game, and we're the snack parents at every soccer
game. That's how we treat our talent."
Mr. Carmichael stayed put.
HBO, long regarded as the entertainment industry's gold standard
in quality content, is adapting to a new era, when rivals from the
tech world are pouring huge sums into original programming and
luring top talent away from traditional TV stalwarts.
As platforms stockpile content, HBO is resisting the impulse to
bulk up, getting pickier about its programming, trimming its
development pipeline and embracing the idea that it won't outbid
the field on every single hot prospect.
"We are not trying to do the most," said HBO Chief Executive
Richard Plepler, adding, "More is not better. Only better is
better."
There are risks to being choosy. HBO could miss out on hits that
go to rivals. And if it places fewer bets than streaming giants, it
can't afford a prolonged streak of flops.
Netflix, far and away the biggest force, last year shelled out
an estimated $6 billion to launch nearly 30 new original shows and
is expected to spend about $8 billion this year. Amazon spent an
estimated $4.5 billion on original and acquired programming in
2017, while Hulu spent $2.5 billion.
That compares with $2.7 billion on programming and five shows
launched at HBO last year.
Mr. Carmichael, the comedian, likened HBO to a museum that is
selective about what it shows. "Where do you want to your art to
live?" said Mr. Carmichael, who renewed his deal with HBO in the
spring of 2016. "HBO is like The Broad," he added, referring to the
Los Angeles contemporary art museum.
HBO has done well financially in the face of stepped-up
competition. For 2017, HBO expects to add more subscribers than it
ever has before, between its traditional TV channel and streaming
service, HBO Now. HBO was a main attraction for AT&T Inc. in
its proposed purchase of Time Warner Inc., which is being
challenged in court by the government.
Driving HBO's gains are new deals with major cable providers.
Instead of raising the retail price of HBO, the pacts rely on
financial incentives for the distributors that encourage them to
put more marketing behind the channel. HBO's subscription revenue
was up 12% in the third quarter, its biggest quarterly increase in
13 years. Total revenue in 2017 grew an estimated 7% to $6.32
billion, according to MoffettNathanson, while operating income rose
12%.
Netflix's top line, however, has surpassed HBO's and is rising
at a faster clip with global expansion. Revenue in 2017 was up an
estimated 31% to $11.6 billion. But as it focuses on growth,
operating profit is expected to be $840 million, well short of
HBO's estimated $2.15 billion.
A Netflix spokeswoman said the company's volume of production
makes sense for its business approach, global reach and need to
appeal to a variety of audiences. Netflix isn't limited by the
constraints of what can be scheduled on a TV channel, she said. And
its marketing of shows is different from traditional TV: Ad
campaigns and on-service recommendations are personalized based on
what people watch.
In terms of original shows, HBO has 21 scripted series compared
with 88 for Netflix and 28 for Amazon. Hulu, which took home the
Emmy and Golden Globe for best drama for "The Handmaid's Tale," is
creeping up, with 17.
HBO says it won't take a show if it can't make the math work, as
it did with the "Lord of the Rings," which Amazon spent heavily
on.
HBO used to bid aggressively on every hot prospect. There was a
fear of an empty cupboard, as was the case after "The Sopranos" and
"Sex and the City" ended.
Many of the projects sat on a shelf or died in production. Some
costly productions fizzled out, including the Martin
Scorsese-produced drama "Vinyl" about the record industry in the
1970s, which lasted only one season in 2016.
Now HBO takes fewer swings. But that doesn't mean every show has
to be a "Game of Thrones"-size hit. Two of HBO's most-watched shows
are lighthearted, sophomoric comedies: "Ballers," about fast-living
athletes, and "Vice Principals," about rival educators in
Florida.
An HBO veteran, Mr. Bloys became programming chief in 2016 after
Mike Lombardo stepped down from the role. Many of HBO's biggest
shows -- "Game of Thrones," "True Blood," "Boardwalk Empire" --
were shepherded by Mr. Lombardo.
New projects Mr. Bloys is championing include "Succession,"
about a dysfunctional family that controls a media empire, and
"Lovecraft Country," from "Underground" producer Misha Green with
"Get Out" director Jordan Peele producing based on the Matt Ruff
novel about America in the Jim Crow era.
"HBO's still the place to be" and an "iconic brand," said Rick
Rosen, partner and television head at the powerful talent agency
WME. Still, the network's high bar and limited space can be a
challenge. "If I'm selling a high-end drama or comedy, am I going
to be able to get on the schedule?" he said. "That's not a factor
at Netflix."
Since HBO doesn't release all the episodes in a series at once,
as Netflix does, it has more marketing flexibility. In the case of
"Big Little Lies," HBO used half of its marketing efforts in the
latter stage of the show's run, helping boost ratings heading into
the finale.
"Their marketing is so strong," said Nicole Kidman, co-star and
a producer of HBO's "Big Little Lies," which won her an Emmy and a
Golden Globe. "They were completely engaged."
HBO gets credit from talent for having a light touch. "They know
how to get out of the way," said Issa Rae, co-creator and star of
the comedy "Insecure," about a black woman trying to navigate work
and romance in Los Angeles, a world that probably doesn't resonate
with most HBO executives. Ms. Rae added, "they've never claimed to
understand all the jokes on the show."
Write to Joe Flint at joe.flint@wsj.com
(END) Dow Jones Newswires
January 16, 2018 02:47 ET (07:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Time Warner (NYSE:TWX)
Historical Stock Chart
From Mar 2024 to Apr 2024
Time Warner (NYSE:TWX)
Historical Stock Chart
From Apr 2023 to Apr 2024