HBO–and nothing but

Jul 23, 2001  •  Post A Comment

HBO Chairman and CEO Jeff Bewkes raised eyebrows with his recent “appeal” to the assembled TV critics at the semiannual press tour in Pasadena, Calif., asking them to tell their readers they can order the high-profile AOL Time Warner pay TV service unbundled, without necessarily also paying for an expensive premium-pay package that might set them back “$50, $75, $90 for a bunch of stuff.”
“That’s very expensive,” he said. “And people don’t want to buy that.”
Cable service representatives are trying to sell would-be HBO subscribers a “plumbing contract when they call up,” Mr.
Bewkes said.
At the largest multiple system operators, spokespersons were uniformly incredulous that this was an issue for HBO. At AT&T Broadband, for example, the word was, “Our customers can always tell us what they specifically want, and get it.”
Similarly, HBO’s sister company, Time Warner Cable, said, “We’ll sell whatever the customer wants.”
A random, unscientific sampling of individual premium cable subscribers, however, quickly demonstrated that Mr. Bewkes had a point, with the subscribers in general agreement that navigating through the plans and possibilities for their cable service was no simple just-give-me-what-I-want task.
Mr. Bewkes and his colleague, Chris Albrecht, president, HBO Original Programming, also briefly discussed HBO On Demand, another potential HBO subscriber option for the future that is now being tested in Columbia, S.C.
Though the South Carolina test of HBO subscription video on demand offers the additional service for free to HBO subscribers, the network’s expectation is that in the future there will be an additional charge of around $4 per month for the ability to access an a la carte menu of previously viewed HBO programming that is in effect unbundled from the network’s schedule.
As Mr. Bewkes put it: “We’re trying to assess the demand at which kind of prices for what kind of delivered product.”
As an example of on-demand “product,” Mr. Bewkes suggested “things that aren’t on the [HBO] schedule for that month. It might be last season’s `Sopranos,’ it might be last year’s documentaries or movies.”
The South Carolina test has been so successful and the demand for On Demand so great that the “system crashed,” Mr. Albrecht said, calling that the mark of a successful test.
The crash Mr. Albrecht alluded to had been caused by a software problem rather than by a failure of broadband itself, an HBO spokesperson said later. In general, the plan for HBO’s SVOD will be to show only programming that has first debuted on the main service, the spokesperson said.
As for Mr. Bewkes’ appeal to the critics, Mr. Albrecht seconded the notion “they [cable company sales reps] don’t tell you that you can just buy HBO,” and he suggested that “brand identity” might even be more important to the “HBO subscriber of tomorrow.”
Back in the world of today, Mr. Bewkes said that he expected HBO earnings to grow by “at least 20 percent” this year, to around $675 million to $700 million.