HBO's "Case By Case" Strategy for Going Digital Overseas

Courtesy of HBO
Simon Sutton

The network, which serves 92 million non-U.S. subscribers, is analyzing its approach to a global strategy.

This story first appeared in the Dec. 18 issue of The Hollywood Reporter magazine. To receive the magazine, click here to subscribe.

Should HBO adjust its global strategy?

The network serves 92 million non-U.S. subscribers by operating foreign networks (in 60 countries), licensing its programming (to more than 150 markets) or launching over-the-top digital services, as it did with HBO Nordic in 2012.

All have proved successful, but some analysts predicted HBO would prioritize the third approach, pointing to Netflix's global OTT rollout. But the company instead has doubled down on licensing in some big markets, extending exclusive pacts with single partners, including in Japan and Canada. In November, HBO consolidated Sky deals in five countries into a single arrangement after the latter company became a Pan-European pay TV giant in 2014.

Fox's Star India struck an exclusive deal for such HBO originals as Game of Thrones and True Detective, which previously aired on the HBO Defined channel that will be discontinued. HBO also will rebrand its movie channel in India.

"They have decided that it is more profitable to let others license their content and brand versus build an OTT product in certain markets," says MoffettNathanson's Michael Nathanson. "In others, like the Nordics and Latin America, they have decided they should do it themselves."

HBO CEO Richard Plepler has hinted at more OTT moves, though "we're going to take it case by case," he said in August. Indeed, the proliferation of OTT services, including from Netflix and Amazon, has driven up the cost of content. But HBO international and content distribution chief Simon Sutton says that's not necessarily a reason to go OTT: "Yes, you have Netflix launching around the world, but each market has launched a bunch of new services in anticipation of Netflix. That has pushed up the value of licensing and tilted the scale."

The HBO strategy varies by market, "according to how receptive it is to HBO programming and media regulation," says Wunderlich's Matthew Harrigan. "Global direct-to-consumer is still a huge growth vector."

Many expect HBO to reveal another foreign OTT deal soon. But in some countries, OTT launches from other companies have strengthened HBO's hand in licensing. Adds MKM Partners' Eric Handler, "The preferred path is to have either a pay TV or OTT presence so you can benefit from a recurring subscription revenue stream."

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