HBO is set for big structural changes that will lead to more content to better compete with streaming services such as Netflix and Amazon, according to the man charged with overseeing the network following the completion of the $85 billion AT&T-Time Warner merger.
The New York Times reports that John Stankey, the longtime AT&T executive and new head of Warner Media, outlined the new path for HBO at a recent corporate town hall meeting at the company's Manhattan headquarters. Stankey hosted the town hall meeting with HBO CEO Richard Plepler, and broadly laid out the challenges and opportunities he saw for the premium cable network.
“It’s going to be a tough year,” Stankey told the audience at the meeting, according to The Times. “It’s going to be a lot of work to alter and change direction a little bit,” he added.
Around 150 employees attended the meeting and Stankey sought to ease their concerns over job security following the merger. “The good news for many of you in this organization is that it’s not Fox or Disney sitting up on this stage now,” Stankey said. “There’s virtually no duplication with AT&T in what we do,” he added, implying that jobs were safe. He did, however, warn the assembled crowd that the year ahead would be difficult as big changes were afoot. “I suspect if we’re in a situation where we’re going to be investing heavier, that means that there’s going to be more work for all of you to do — and you’re going to be working a little bit harder,” Stankey said.
He added: “You will work very hard, and this next year will — my wife hates it when I say this — feel like childbirth.... You’ll look back on it and be very fond of it, but it’s not going to feel great while you’re in the middle of it. She says, ‘What do you know about this?’ I just observe, ‘Honey. We love our kids.’”
Stankey never directly mentioned Netflix, but the spectre of the streamer loomed large at the meeting. He said that HBO needed to increase its subscriber base and, more important, increase the amount of content to increase the number of hours consumers watched its shows, implying that the company needed to move away from its long-established and successful positioning as a boutique network.
“We need hours a day.... It’s not hours a week, and it’s not hours a month. We need hours a day. You are competing with devices that sit in people’s hands that capture their attention every 15 minutes,” Stankey said, adding that he wanted "more hours of engagement" in order to get more customer data to better monetize "through alternate models of advertising as well as subscriptions."
In June, Stankey told The Hollywood Reporter that his "goal is not to change the culture" at HBO, but instead focus on distribution and technology; at the meeting, however, Stankey seemed to go further, intimating that the company needed to grow in size. "As I step back and think about what’s unique about the brand and where it needs to go, there’s got to be a little more depth to it, there’s got to be more frequent engagement,” he said.
Plepler pressed Stankey on whether there would be increased investment in HBO to fund the increased content. “I do believe there needs to be stepped-up investment,” Stankey replied, but added that the company needed to make money. When Plepler shot back that HBO was profitable, Stankey replied, "just not enough."
In order to ramp up revenue at HBO, Stankey said there needed to be big increases in its subscriber base, which totals over 140 million worldwide with approximately 40 million in the U.S. Stankey said that HBO would have to become "a much more common product," but at the same time not lose the commitment to quality that made the brand special.
“You’ve earned the dynamic amongst your customer base that when you put a new piece of content out there, people will try it, just because they trust you’re going to be putting something in front of them that they might like. We now need to figure out how to expand the aperture of it without losing the quality,” Stankey said.