HBO CEO Discusses Importance of Movies and Originals, Netflix
HBO CEO Richard Plepler on Thursday told an investor conference that he feels very good about the premium TV company's strategic and financial positioning despite increased original programming efforts by the likes of Netflix, Showtime and others.
And he once again hinted that the HBO Go mobile service could one day become a standalone offer without the need for a pay TV subscription, while emphasizing there was no near-term plan for such a change.
"For us, it's not a zero sum game," Plepler told the Nomura Global Media & Telecom Summit in New York in a session that was webcast. "Other people are going to do good work. That's fine." HBO is focusing on "playing our game" to the fullest extent, he said.
Attracting Hollywood talent is key, and HBO has been doing particularly well on that front, he said. "We can invest more in original programming than our competitors do," Plepler told the conference. "The brand is an extraordinarily strong magnet for talent. That's why Hanks and Spielberg keep coming back. Martin Scorsese keeps coming back."
Asked about Netflix's increasing original programming spend, he said the line of creative talent at HBO's Hollywood office has only grown longer in recent years. "I'm not concerned about that at all," he said. "Our challenge will be doing all the things we want to do, not losing creative voices to our competitors. We're not."
Plepler also highlighted that HBO usage indexes higher in Netflix homes and vice versa. "We think it's additive," he concluded. "We want to play our game. We want to do what we do well."
Discussing the importance of films and originals to subscribers, Plepler emphasized that 80 percent of HBO's schedule and 81 percent of viewing is made up of theatrical movies. And 40 percent of HBO subscribers only watch movies, he shared. The cumulative views of movies can reach around 20 million, he added.
"Our subscribers love the movies. Securing that theatrical advantage was important," Plepler told the Nomura conference. The company has done so by securing the output from three major studios plus Summit Entertainment for years to come. That compares to one major studio for Epix and two for Starz, although Walt Disney films will eventually move from Starz to Netflix, he highlighted.
Asked whether films or originals are more important for the business, Plepler said both. "Original programming is the halo on our brand," he explained. "We want different parts of our constituents to say I need that. Originals drive that conversation" and allow HBO to be part of the zeitgeist and cultural conversation of the nation, he added.
Plus, sports, HBO Films features and documentaries also help HBO reach certain segments of its 41 million U.S. subscriber base. And he said HBO is trying to use all its content, driven by buzz for originals, to attract some of the 70 million U.S. homes that have pay TV, but not HBO. He compared them to undecided voters in an election.
What about the 8 million-9 million broadband-only subscribers in the U.S.? Some observers have wondered if the popular HBO Go could be eventually offered on a broadband-only basis. Plepler said the next technological update to HBO Go will build in as much flexibility as possible. "Right now, we have the right model," he said. But he added: "We will not be caught unable to pivot if we so choose."
Discussing his team's focus for subscriber growth, Plepler said that "there are decidedly some opportunities for us," particularly a couple of unspecified pay TV operators that could boost the penetration of HBO.
How does HBO Go viewing differ from linear viewing of HBO? Plepler said that on the mobile platform, viewing share between films and originals is inversed to 20 percent-80 percent.
Asked about the importance of providing subscribers an opportunity for Netflix-style binge viewing, Plepler said HBO Go does allow for some of that. "We love being part of the cultural conversation for 13 weeks" though, he emphasized. "If you want to binge, you have that option. But for us, for our brand, we like the dynamic."
Plepler was also asked if HBO Go passwords are widely shared, possibly undermining subscriber growth. The HBO boss said though that it is "almost non-existent." College kids are most likely to use their parents' passwords. "Those are future subscribers," Plepler said, adding that there was "no real impact on the business."
Plepler also touted HBO's financials, saying they are higher than ever. "2013 will be a great year," he predicted. "We like our profit growth going forward very much."