Since Netflix moved into original content in 2013, it’s had a pleasant rivalry with HBO based on mutual respect.
Netflix’s content chief Ted Sarandos has even said Neflix’s “goal is to become HBO faster than HBO can become us.“
Now we’re starting to see that HBO wants to become more like Netflix — particularly with regards to international expansion and supersizing production.
During Time Warner’s Q4 earnings call, HBO CEO Richard Plepler and Time Warner’s Jeff Bewkes revealed the company’s focus going forward.
First, HBO intends to ramp up production, which will increase by 50% this year. Second comes international expansion.
This echoes Netflix almost exactly, which has said it will double its production of originals this year, and produce a whopping 600 hours of original content, and which recently added 130 new countries.
Netflix’s thesis is that it can soar to profitability by creating a ton of (globally available) original content, and simultaneously expanding its subscriber base to reduce its cost per user.
This two-step plan is built on the assumption that the variations in TV show preferences within countries are greater than those between countries, a stance that Netflix CPO Neil Hunt stressed to Business Insider. This means that a show considered “niche” can still find audiences all over the world. And it also means that international expansion can dramatically reduce costs per subscriber — provided the company can create a globally compelling brand.
Both HBO and Netflix are betting they can.
Finally, HBO wants to ape Netflix and become “ecosystem agnostic” (as Plepler puts it). That means that, like Netflix, HBO wants to live wherever you are: your laptop, phone, smart TV, and so forth. And it means a break from the traditional cable package.
HBO has pushed this with its cable-free streaming service, HBO Now. The service launched last April, and lets you pay $15 a month to get HBO a la carte. But HBO Now has struggled to keep pace with analyst expectations, and only has 800,000 paying subscribers so far, according to Plepler.
Plepler has tried to put HBO Now subscriber growth in context, emphasising that some content that is particularly suited for digital platforms, like Vice’s daily news show and Jon Stewart’s coming project, has not yet debuted. But HBO still has a ways to go in extricating itself from a reliance on traditional cable, and building an “over-the-top” brand like Netflix.
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