http://www.wsj.com/articles/richard-plepler-what-happens-after-hbo-cuts-the-cord-1445911379
Richard Plepler: What Happens After HBO Cuts the Cord
Updated Oct. 26, 2015 10:03 p.m. ET
Can a cable network move beyond cable? That’s what HBO is trying to do with its
HBO Now service, which lets people subscribe to the network over the Internet.
For insights into HBO’s strategy, and a possible look at the future of cable,
The Wall Street Journal’s editor in chief, Gerard Baker, spoke with HBO Chief
Executive Richard Plepler. Here are edited excerpts of their discussion.
A new vision
MR. BAKER: Just in the last year you’ve taken a really big step. A lot of
companies have talked about cutting the cord, and what it all means for
traditional cable-TV companies, traditional media companies.
But you went ahead this year pretty boldly, with the launch of HBO Now. I
remember you launched with Tim Cook. Can you tell us the discussions that you
went through, and how you came to that decision?
MR. PLEPLER: We sat back and took a look at where the ecosystem was going. You
have 10½ million broadband-only homes in the United States. Millennials are
fast cutting the cord and watching their television and getting their
entertainment in myriad different ways. We just said to ourselves, “We want to
be available where, when and how people want our service.”
We’re talking to our traditional partners as well about bundling HBO Now in
their broadband-only packages. This is not just exclusive to our new digital
partners like Apple and Android and Roku. This also can be a tremendous
opportunity for our traditional distributors.
We think there’s 10 to 15 million additional homes out there that want HBO. And
our job is to make our product, our network available to those people when they
want it, how they want, and whatever way they want it. That’s why we made the
decision.
MR. BAKER: You must have had some interesting conversations with the cable
companies. That clearly is a threat to their business, isn’t it?
MR. PLEPLER: I don’t think it is a threat to their business. They have millions
and millions of broadband-only customers. So we’re saying a very simple thing
to them: “Why wouldn’t you want to take a product like HBO, make it a part of
your package, and share the revenue with us?” We’re having better conversations
with some than with others. But I think the proof is going to be in the
pudding. People are going to see that there are myriad different ways to grow
their business.
Where we go next
MR. BAKER: What do your models tell you about what will happen to traditional
cable subscribers under this?
MR. PLEPLER: What people really want are bundles that don’t have 500 channels
in them. They want more curated bundles. That’s terrific for us, because as the
price of a traditional package goes down, it’s much easier for a consumer to
think about adding HBO to it. And when people put HBO in the bundle, 98% of
those people are not going to leave the bundle. And that is a very compelling
proposition that we make to our partners.
MR. BAKER: HBO, when it started, was very traditionally second-run Hollywood
movies. You in the last 10 years have done an extraordinary amount of original
programming, a model that’s been followed by many other traditional cable
companies. But everybody is fighting now for that incredibly valuable content,
original content.
How is that changing the way in which Hollywood works, and changing the battle
for talent for content?
MR. PLEPLER: What we say to ourselves over and over again is, “Play our game to
our full capacity, and we are going to have more than our fair share of talent
coming into the door.”
There’s wonderful work being done across a panoply of networks and streaming
services. And I think that’s terrific. It has not interfered one bit with our
ability to do anything and everything that we want to do.
MR. BAKER: Content is an expensive business. Is there really going to be enough
revenue to go around?
MR. PLEPLER: I say all the time, “More is not better, only better is better.”
Just because something cost $80 million or $90 million to do does not mean it’s
going to be a hit. Some of our best programming, whether it’s in the talk-show
category like John Oliver or Bill Maher, is not, relative to the cost of an
hour series, expensive. And yet it resonates across the zeitgeist, punches
above its weight and does an enormous amount for our brand.
This year alone we had at the beginning of the year three of the noisiest
projects that we’ve ever had, “The Jinx,” “Scientology” and “Frank Sinatra”
were all, relatively speaking, quite cost effective. So the job is not just to
spend more money. The job is to spend money strategically. We just announced
“Sesame Street,” we announced “ Bill Simmons,” we announced a “Vice” news
service. We’re trying to make strategic investments that elevate our brand at
every turn.
MR. BAKER: Tell us a bit about how digital innovation is changing Hollywood
culture. We’ve talked about distribution principally. How else is it changing
the way in which Hollywood works?
MR. PLEPLER: The talent of course loves the idea of being able to paint on a
different kind of canvas. So you have somebody as gifted and imaginative as
Steven Soderbergh coming in and saying, “I have an idea. I want to do a series
of minimovies that ultimately aggregate into a larger story. And I want to do
it on HBO Now.”
Artists of all kinds, and you’ll start to see some of these announcements in
the coming weeks, are coming to us and saying, “I want to paint, but I want to
paint on HBO Now. I want to do short form, comedians, sports.”
Even Bill Simmons, who’s obviously going to do a show for the network, is
looking at HBO Now as another option for doing kind of short-form programming
in his genre. So I think the beauty of this is that the ideas, the IP is going
to come from the talent as it always does. And the best ideas are going to come
from the people we work with, not from us.
