HBO Max And Sesame Street Highlight The Stupidity Of Mindless Media Megamergers

Culture

from the merge-ALL-the-things! dept

If you recall, AT&T spent nearly $200 billion on megamergers thinking it was going to dominate the online video advertising space. But after spending a fortune on DirecTV and Time Warner, laying off 50,000 people, killing off popular properties like Mad Magazine and DC’s Vertigo imprint, it quickly became clear that AT&T executives had absolutely no idea what they were doing.

After stumbling around drunkenly for a while, AT&T returned to what it’s best at (running broadband networks and lobbying the government to crush broadband competition), and spun off Time Warner into an entirely new company, Warner Media. Warner Media immediately then turned around and announced a blockbuster merger with Discovery, creating the creatively named Warner Brothers Discovery. 

If you’re a consumer or employee at any of these brands and companies, the last few years have proven to be a befuddling mess. Remember that the AT&T acquisition of HBO and Time Warner resulted in so many different brands it even confused employees at AT&T. Despite efforts to consolidate content, it’s somehow only gotten dumber since then.

Managers at the new company have taken a hatchet to HBO’s offerings in particular, culling a wide variety of popular content to cut costs. That includes roughly 200 episodes of popular shows like Sesame Street and dozens of films and shows overall. Why? In part because the new consolidated company doesn’t want to pay residuals in a bid to make deal financials make sense:

While HBO Max already paid for the production of these shows, it’s still on the hook for residuals, including so-called back-end payments to cast, crew and writers, based on long-term viewership metrics.

By removing these films and shows, especially the ones HBO Max created rather than licensed, executives can cut expenses immediately. Warner Bros. Discovery has promised at least $3 billion in synergies stemming from the merger of WarnerMedia and Discovery, announced in May.

Ah, megamerger synergies.

There’ve been several new additional casualties thanks to this latest series of mergers, including TBS’s Full Frontal With Samantha Bee (Turner and TBS merged with Warner Brothers way back in 1996). With the merger of HBO Max and Discovery+, they’re hoping to “declutter” what’s now just a discordant parade of content, much of which executives didn’t really even want. There’s also been just a steady parade of layoffs of employees they didn’t want either.

HBO employee John Oliver went so far as to call this final form version of HBO Max little more than a “series of tax write offs”:

Again, this is just another example of the U.S.’ harmful obsession with megamergers, consolidation, purposeless (outside of stock fluffing) deal making, and growth for growth’s sake. All of these deals make perfect sense to the executives, lawyers, and accounting magicians exploiting them for tax breaks and various financial benefits, but that doesn’t make this whole saga any less preposterously pointless.

Employees and consumers certainly didn’t benefit from this idiotic parade of events that began with AT&T wasting hundreds of billions of dollars to buy companies it was too incompetent to run. And somehow the saga has only gotten dumber since then.

Filed Under: hbo, hbo max, john oliver, layoffs, media consolidation, megamergers, synergies, telecom
Companies: at&t, hbo, warner bros., warner brothers discovery

John Oliver Tries To Scare DC Into Doing Something About The Privacy Dumpster Fire That Is Adtech

Privacy

from the incompetent-by-design dept

We’ve noted for years that the adtech sector is a convoluted, unregulated hellscape, where consumer data is bought and sold with nothing remotely close to competent oversight. The end result is just about what you’d expect: a percussive parade of massive scandals in which location, financial, and other sensitive data is bought, sold, leaked, abused, hacked, and spread far and wide with little real recourse.

Despite this, the U.S. still hasn’t passed even a baseline privacy law for the Internet era. And while some folks will insist it’s because it’s too hard, the real reason is because there’s simply too much money being made; and wealth accumulation, if you hadn’t noticed in the United States, trumps all things.

Last week John Oliver did a fantastic bit explaining the (quite intentionally) complicated, ethics-optional mess that is adtech, with a specific focus on data brokers:

Oliver points out just some of the many scandals in the space (like that time Epsilon Data Management knowingly sold the data of 30 million elderly people to criminals who then scammed them repeatedly, or the time widely available cellular consumer location data was abused by stalkers).

But Oliver then does something entertaining: he reveals that his show directly approached data brokers and purchased the online behavior and location data of many people who are likely lawmakers working in or around the Capitol building. Oliver only makes a few vague nods to some of the questionable browsing activity he discovered, while hoping lawmakers are now motivated to do something about it:

“You might want to channel that worry into making sure that I can’t do anything,” he advised. “Sleep well!”

Again, I’d wager he may not have actually found much of anything about any specific lawmaker, but it’s an amusing feint all the same. And we desperately need something to motivate the entirety of DC, because what we’re doing now (inconsistent wrist slaps years after violations, fines that are a tiny fraction of the money made from the abuse — and, oh yeah, here’s some free credit reporting) isn’t working.

Again, if we actually cared about this stuff, it wouldn’t be that difficult to fix.

A fairly basic Internet privacy law, combined with actually funding and staffing regulators at the FTC, would go a long way toward addressing the issue. But we don’t do that. Again, not because it would be all that difficult or expensive (even though adtech is overly complicated by design to try and dodge oversight), but because the cash trough of consumer data monetization is just too lucrative.

Attempting to rein in just the telecom sector or just the airline sector is one thing (and you may have noticed we can’t even do that). But when you target the online consumer data space you’re going up against a massive coalition of industries with bottomless lobbying budgets, including “big tech,” telecom, software, health care, marketing, and more. All of which like things just the way they are: broken and hugely profitable.

What I still think will happen is eventually there will be a data scandal too massive and problematic to ignore, featuring a lot of very powerful and influential people. Likely a scandal that puts human lives at risk in some way. Only then will DC wake up to the perils of letting the adtech market run amok, and even then my faith in DC competently crafting helpful solutions in response remains shaky at best.

Filed Under: adtech, behavioral data, blackmail, congress, consumers, data brokers, ftc, hacking, hbo, john oliver, location data, privacy, privacy scandals

AT&T CFO Wants A Cookie For Screwing Up The Time Warner, DirecTV Mergers

Failures

from the fail-upward dept

We’ve noted more than a few times how the AT&T Time Warner and DirecTV mergers were a monumental, historical disaster. AT&T spent $200 billion to acquire both companies thinking it would dominate the video and internet ad space. Instead, the company lost 9 million subscribers in nine years, fired 50,000 employees, closed numerous popular brands (DC’s Vertigo imprint, Mad Magazine), and basically stumbled around incompetently for several years before recently spinning off the entire mess for a song.

I just got done noting how the US press’ total failure to adequately outline the scope of this mess ensures that the executives, regulators, and various megamerger cheerleaders will never be held accountable for it. That, in turn, all but guarantees it will happen again. And again. And again. America’s obsession with “growth for growth’s sake” and megamergers is built on the inherent promise that no matter how many times a megadeal results in layoffs, chaos, and no benefits for anyone other than executives and investors, we’ll simply refuse to learn anything from the experience.

That requires a lot of revisionist history. So, as if on cue, AT&T CFO Pascal Desroches this week complained that AT&T didn’t get enough credit for turning HBO Max into a successful streaming brand. AT&T was forced to spin off this mess because the doddering telco sucked at running a media company. But Desroches is trying to claim the recent spinoff of its media ventures occurred because AT&T didn’t get enough credit for building HBO:

“AT&T CEO John Stankey was ?keenly focused on? the company being in the early stages of a ?significant evolution in connectivity,? 5G and fiber, with management knowing it needed to invest there and in HBO Max, he told the Oppenheimer Annual Technology, Internet & Communications Conference.

?One of the things we realized (was that), even though we were succeeding in our launch of HBO Max, the market wasn?t giving us the appropriate credit for it,? Desroches said.

This is a weird rewriting of history. Ex-AT&T CEO Randall Stephenson was literally shoved into early retirement because instead of focusing on the company’s core competencies (running and building networks; spying on Americans; lobbying the government to hamstring competition), AT&T blew an absolute ocean of money trying to elbow its way into the TV business. But like so many telcos (see: Verizon Go90), decades as a pampered government telecom monopoly leaves you ill-suited toward making adequate inroads in creative, competitive industries.

To be clear, AT&T’s path post-merger was pretty obvious. It had to take the HBO brand, not fuck it up, and shovel it into a functional streaming experience. But the company struggled for the first several years to do that. It released so many conflicting, confusing AT&T and HBO streaming brands that they even managed to confuse their own support employees. Meanwhile, AT&T executives, obsessed with engagement over quality, have taken the HBO brand and watered it down. Now you can see a lot of quality HBO fare like Six Feet Under intermingled with AT&T concepts like “Fuckboy Island,” which kind of speaks for itself.

If you actually talk to any of the creatives at places like DC or HBO (the ones who weren’t fired, anyway), they’re quick to point out that AT&T brass really had no idea what they were doing. It was like having an alleyway brawler run an opera house. Telcos aren’t good at adaptation, creativity, competition, or innovation, because as government-pampered monopolies, they’ve never had to be. I’m not sure how many times we have to watch a telco fall on its face in this fashion before that becomes clear to people.

The reality is that AT&T screwed up, then had to spin off the entire mess because it screwed up. For AT&T’s CFO to suggest the spin off was because the “market didn’t give us a cookie” for building HBO Max is some weird, revisionist history. Revisionist history that once again ignores the 50,000 post-merger(s) layoffs, the fact AT&T received billions from government to make all of this work (the $42 billion Trump tax cut, merger approvals, the death of net neutrality), and still somehow screwed it up. There is absolutely no scenario in which any AT&T executive involved in any aspect of this mess gets a cookie.

Filed Under: acquisitions, broadband, content, hbo, john stankey, mergers, pascal desroches
Companies: at&t, directv, time warner

AT&T's Terrible New TV Branding Confuses Even AT&T

Too Much Free Time

from the DERP dept

AT&T’s efforts to dominate the online streaming (and advertising segment) has had a bit of a rocky start. After spending more than $150 billion to acquire both DirecTV and Time Warner in recent years, AT&T’s been losing subscribers hand over fist anyway. Part of the problem is that the company acquired so much debt in the course of the deal (AT&T is among the most indebted companies in the world), AT&T’s been forced to raise rates on subscribers. Given the rise in streaming competitors, those users are wisely just heading for the exits.

But AT&T’s been making some notable missteps on the branding front as well. The company keeps launching, scrapping, and then re-launching so many different TV options it’s confusing the hell out of customers. As the company stumbles its way into building one cohesive brand, it has gotten kind of, well, silly:

Apparently AT&T’s new TV branding isn’t just confusing consumers. It’s also confusing AT&T. The company’s marketing and support departments appear to have been bungling the names of several new AT&T TV products in marketing and support materials, only compounding consumer confusion. AT&T recently eliminated its DirecTV Now streaming TV brand, and renamed it (quite creatively) “AT&T TV Now.” The company also rolled out another completely new service and called it “AT&T TV.” The former service is just another streaming app, while the latter service requires a new AT&T set top box and is currently in a glorified beta.

This being the telecom sector, customer support is already kind of an afterthought. But AT&T’s confusing branding has taken things to an entirely new level, leaving many AT&T customers in a bizarre, customer service purgatory:

“To make matters even worse, most tech support for AT&T TV Now is labeled AT&T TV on AT&T’s website. When you try to contact AT&T TV Now you need to use the contact information for AT&T TV. This has resulted in many of our readers confused about how they contact… AT&T TV Now to ask a question.

AT&T’s website does not help. AT&T TV Now is only found if you click on streaming. For a while after the name change, clicking on DirecTV Now in some menus on AT&T’s website brought you to AT&T TV [instead of] AT&T TV Now.

Even just this week when AT&T announced a deal with Starz they didn’t list AT&T TV Now but listed AT&T TV. When asked about this AT&T said AT&T TV Now was lumped together with AT&T TV.

As we’ve long noted, telecom companies aren’t particularly innovative because they’ve spent the last few generations as government-protected and pampered monopolies. Fused to the nation’s intelligence and law enforcement community, they’re the personification of “too big to fail.” Their deep lobbying tendrils also mean they enjoy regulatory capture on the state and federal level, making any real accountability for bad behavior a rarity, at best.

Given real competition is alien to them, Verizon and AT&T keep doing face plants as they attempt to erode Google and Facebook online video ad revenues. That’s why instead of directly competing or innovating, the telecom sector’s first inclination is usually to try and tilt the regulatory playing field or cheat in some fashion. And while these kind of shenanigans have caused plenty of problems in the broader internet and streaming TV ecosystem, those problems would likely be immeasurably worse were the telecom sector actually competent outside of its core competencies (building networks, lobbying to erode competition).

Filed Under: at&t now, branding, hbo, hbo go, streaming, tv
Companies: at&t

AT&T Blackout Of HBO On Dish Highlights Perils Of Megamerger Mania

Failures

from the do-not-pass-go,-do-not-collect-$200 dept

You might recall that AT&T recently defeated the DOJ’s challenge to their $86 billion merger with Time Warner thanks to a comically narrow reading of the markets by U.S. District Court Judge Richard Leon. At no point in his 172-page ruling (which approved the deal without a single condition) did Leon show the faintest understanding that AT&T intends to use vertical integration synergistically with the death of net neutrality to dominate smaller competitors and squeeze more money from consumers in an ocean of creative new ways.

Throughout the case the DOJ tried to demonstrate (poorly) that a bigger AT&T has every incentive to behave badly. Admittedly those efforts were pretty feeble since the multi-decade steady lobbyist erosion of antitrust law left them trying to make the case within very narrow confines of legally-acceptable economic theory. The DOJ also shot itself in the foot by refusing to even mention AT&T’s attacks on net neutrality, likely because it didn’t want to highlight the fact that another arm of the government (the FCC) was actively harming the same consumers the DOJ claimed it was trying to protect.

Regardless, with the merger still less than 5 months old, AT&T has been quick to show why people were concerned. The company has already quickly jacked up rates on most of its subscribers and imposed all manner of bizarre new fees as it tries to recoup the massive debt it incurred from both the DirecTV and Time Warner mergers. And this week, AT&T blacked out (previously Time Warner-owned) HBO content for Dish Network customers during contract negotiations, the first time that has happened in the history of HBO:

“AT&T Inc.?s HBO and Cinemax programs were pulled from Dish Network Corp.?s satellite service after the companies failed to reach a new distribution agreement, setting up a real-life ?Game of Thrones? between two of the biggest players in pay TV. It is the first time in HBO?s more than four-decade history that programming has been blocked at a distribution partner over a contract dispute, according to AT&T, which acquired the premium cable network as part of its June $85 billion acquisition of Time Warner.

We’ve noted for years how retransmission and carriage fee disputes in the cable industry have grown increasingly common and are only getting worse. Basically, when it comes time to sign a new deal paying for content, broadcasters generally demand huge rate hikes for the same channels. Cable operators then play hardball, and during negotiations one side or the other (usually broadcasters) pulls their content from the cable lineup. Consumers never see refunds for these feuds, even though these feuds have occasionally left them without access to channels they’ve already paid for, for months.

For weeks, consumers are bombarded with PR missives, new websites and on-screen warnings all trying to amplify public outrage and drive greater pressure for one side or the other to buckle. After a while, the two sides strike a new confidential deal, and the higher rates are then quickly passed on to consumers. In a letter to lawmakers last year, Dish Network argued that consumers have faced 750 such broadcaster blackouts since 2010, with the retransmission consent fees that broadcasters demand growing a whopping 27,400% between 2005 and 2016.

Of course Time Warner and HBO management traditionally took the high road to avoid these kinds of problems, something that appears to have suddenly and abruptly changed. HBO execs are implying to media outlets that this could all just be a press stunt by Dish to apply pressure on AT&T as it fights the DOJ’s recent appeal. Even if that’s the case, consumer groups and out-leveraged smaller cable ops have been pushing for years for updated regulations that ban companies from blacking out content while companies bicker over rates.

These demands are never really taken seriously in DC, as it’s seen as too heavy handed of an intervention into negotiations between two companies. Ignored is that during these outages, consumers don’t see refunds for content they paid for, and this consumer outrage itself is actively encouraged by both sides in a bid to apply pressure on the other end of the deal. While the FCC under Wheeler flirted with the idea of basic FCC rules putting this ridiculous tap dance to bed, there was simply no follow through.

That AT&T was going to use its newfound power to jack up prices for its TV competitors wasn’t rocket science, especially if you’ve watched AT&T’s particular flavor of “doing business” anytime over the last two decades.

The irony here is that AT&T even promised the DOJ that it would avoid these kinds of blackouts as a merger condition if the DOJ approved the deal. But the DOJ sued anyway claiming it was helping consumers (though Trump’s disdain for CNN and Trump ally Rupert Murdoch’s lobbying against the deal are seen as more likely justifications for a consumer-protection phobic Trump administration). But the DOJ’s sloppy handling of the case and a terrible ruling by Leon left AT&T more powerful than ever, and consumers and competitors left more vulnerable than ever.

And that’s before you even get to AT&T’s plans for the post net neutrality world, currently on hold pending the outcome of next February’s looming court battle.

Here in the States we have this bizarre tendency to either mindlessly approve megamergers with zero conditions, or conditions that companies are allowed to just tap dance around. The resulting mega-company then behaves badly, and everybody just stands around with a stupid look on their face. Rinse, wash, repeat.

Filed Under: competition, hbo, mergers, retransmission, retransmission disputes, tv, tv blackouts
Companies: at&t, dish, hbo, time warner

AT&T Is Very Excited To Try And Ruin HBO

Culture

from the ill-communication dept

Ma bell isn’t much fun at parties. While traditional telcos desperately want to pivot from broadband and cable to video and online advertising, that transition has been challenging. Especially for a sector that has spent the last 30 years as government-pampered regional mono/duopolies. Many of these companies are good at running a network or lobbying government to stifle competition, but they’re simply not very good at things like creativity, innovation, or disruption. That was recently made abundantly clear by Verizon’s face plant after it tried to launch a sexy new Millennial-focused video platform dubbed Go90.

AT&T suffers from the same disease, and it may soon manifest in abundance.

You’ll recall that AT&T’s $86 billion acquisition of Time Warner was allowed to proceed after a comically narrow reading of the market by U.S. District Court Judge Richard Leon. At absolutely no point in his 172-page ruling, did Leon show the faintest awareness that AT&T wants to use the gutting of the FCC, the elimination of net neutrality rules, and vertical integration synergistically to behave anti-competitively in the broadband and streaming video space, something that’s obvious to anybody that has spent thirty seconds watching AT&T do business.

Leon took AT&T lawyers’ arguments completely at face value, resulting in him failing to even apply a single meaningful condition to AT&T’s latest megamerger.

And while the death of net neutrality, regulatory capture and rubber-stamped merger mania are all wonderful things for AT&T, there’s still one little problem AT&T needs to overcome in order to capitalize on its wide, open anti-competitive runway: it’s just not very good at this whole creativity or innovation thing. While it’s clear that AT&T executives think they’re really good at innovation, there are growing concerns that the company is going to meddle with HBO and erode many of the things that made the channel a standout over the last twenty years.

AT&T execs initially stated they’d be leaving HBO alone to do what the company does best. But that promise quickly evaporated this week at a town hall meeting at the network?s headquarters in Midtown Manhattan, where AT&T execs like John Stankey proclaimed that AT&T intends to dramatically reshape HBO to effectively focus on quantity and ad impressions over quality:

Mr. Stankey described a future in which HBO would substantially increase its subscriber base and the number of hours that viewers spend watching its shows. To pull it off, the network will have to come up with more content, transforming itself from a boutique operation, with a focus on its signature Sunday night lineup, into something bigger and broader.

?I want more hours of engagement. Why are more hours of engagement important? Because you get more data and information about a customer that then allows you to do things like monetize through alternate models of advertising as well as subscriptions, which I think is very important to play in tomorrow?s world.?

Of course Netflix has been taking heat for focusing on quantity over quality, resulting in a string of high-profile duds. And AT&T’s version of “monetization” has historically involved things like charging broadband users more money if they want to protect their own privacy. If you’re an HBO exec and alarm bells aren’t ringing in your ears, you likely haven’t paid enough attention to AT&T’s scattershot efforts to dominate media pre-merger. Stankey then tried to equate the experience HBO was about to go through under AT&T management to child birth:

?You will work very hard, and this next year will ? my wife hates it when I say this ? feel like childbirth,? he said. ?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.??

On the plus side, it’s clear that AT&T wants to spend billions on original content to help the new AT&T-owned HBO to match Netflix blow for blow in the streaming wars. On the flip side, AT&T’s corporate culture (indisputably anti-consumer, viciously anti-competitive and historically hostile) is inevitably going to clash with HBO management. HBO has creatively crafted some of the best television in the last decade. AT&T, in turn, has expertise in things like killing net neutrality and finding new, creative ways to rip off taxpayers and its own customers.

That there are going to be tensions between the two companies likely isn’t debatable. And, while success is certainly possible, whether AT&T can shake off some of its own worst habits and “improve” HBO — without eliminating all of its finest traits in the process — is going to prove interesting to watch.

Filed Under: competition, content, content creation, hbo
Companies: at&t, hbo, time warner

The Standalone Streaming Service HBO Didn't Want To Offer Now Has 5 Million Users

Culture

from the innovation-trumps-math dept

You might recall that just a few years ago, HBO had to be dragged kicking and screaming into the modern era. For years the company refused to offer a standalone streaming TV service, worried that it would jeopardize the company’s cozy promotional relationship with existing cable providers (who often all but give away the channel in promotions). As recently as 2013 Time Warner CEO Jeff Bewkes was claiming that such an offering would make “no economic sense.”

Why? Bewkes was worried that offering a standalone option would upset cable partners. At the time, those partners were already offering an HBO streaming app named HBO Go, but only if you signed up for traditional TV. This was art of the industry’s walled garden “TV Everywhere” initiative, a misguided attempt at stopping cord cutters by only giving them innovative streaming services — if they signed up for bloated, traditional television bundles. Bewkes was clearly worried at the time that being too damn innovative would upset industry executives and skew the company’s balance sheets:

“And we would do it if we thought it was in our economic best interest. At this point we don?t think it makes sense. We don?t think the target market is sufficiently large to be attractive at this point. So what we?re doing, and we think this is working pretty well ? we?re working with the [pay TV operators] to increase the penetration of HBO Go in a mutually beneficial way.”

At the time we noted how HBO was letting fear trump innovation. The company was focusing so much on avoiding upsetting cable operators and worrying over the initial impact on the traditional cable TV cash cow, that it forgot that innovation often trumps the math. In reality, the math Bewkes was concerned about were performance and metrics built on a different, changing market that was on the way out. This kind of hesitation was initially great news for Netflix, whose CEO saw all of this coming long before HBO executives did:

“The goal,” says Hastings, “is to become HBO faster than HBO can become us.”

All the while, HBO and Time Warner’s timidity and failure to listen to consumers resulted in many of its shows breaking piracy records. And while HBO couldn’t be bothered to offer a legitimate standalone streaming alternative to piracy, it did spend a lot of time and money trying to derail these efforts, including “poisoning” seeded copies of HBO programs on BitTorrent and sending out oodles of nastygrams to ISPs. Other HBO executives, meanwhile, seemed to share the cable industry mindset that this whole cord cutting thing was just a temporary phenomenon that would blow over.

HBO finally did buckle to offering a standalone streaming service (dubbed HBO Now) in 2014. Just a few years later and the service has just breached 5 million subscribers. And oh, the numbers HBO was so worried about are looking solid too, with HBO Now generating $19 million in revenues for the two months it aired of Game of Thrones Season 7. In this case it all worked out well for HBO, but the company could have enjoyed a much healthier head start if it company executives hadn’t let fear trump natural evolution.

Filed Under: a la carte, cable, hbo, ott, streaming, streaming tv, tv
Companies: hbo

After Previously Claiming the Economics Would Never Work, HBO Streaming Now A Major Windfall

Culture

from the evolution-doesn't-care-that-you're-afraid dept

For years, HBO and owner Time Warner fell into the trap of telling customers what they wanted instead of the other way around. You might recall that HBO and Time Warner spent years waging a rather scorched earth assault on piracy and other “unauthorized viewing,” going so far as to poison show torrents and shut down “Game of Thrones” viewing parties. A major problem with this approach is that HBO wasn’t fully providing pirates an alternative. While HBO was offering streaming to existing cable customers, it spent years ignoring consumer calls for a standalone streaming video platform that didn’t require cable.

There were any number of reasons for this myopia, the biggest being that like any good legacy company, HBO and Time Warner execs were afraid of wounding the traditional cable cash cow (even if said cow was already showing signs of notable mortality at the time). More specifically, HBO was afraid of hurting the cozy, heavily-subsidized relationship HBO enjoys with many cable providers, who all but give the channel away on occasional promotion. So while offering a standalone streaming platform was essential in evolutionary context, HBO consistently insisted it just couldn’t make the economics work for such an option.

So while Time Warner and HBO execs were busy trying to downplay cord cutting as a fad, the piracy of HBO programs continued to smash BitTorrent swarm and other piracy records. That was until March of 2015 when HBO was forced to finally acknowledge the changing tides and launched HBO Now, its standalone streaming app. Fast-forward a little more than two years, and that decision is looking pretty good now in hindsight:

The ?Game of Thrones? effect is in full force for HBO NOW, the premium network?s streaming service for cord cutters. According to new data from app market data provider App Annie, the iOS and Android versions of the HBO NOW mobile app have together generated $19 million in U.S. revenue for the two months containing the airing of ?Game of Thrones? Season 7, as of Monday, August 21.

App Annie says it expects HBO NOW?s mobile apps to pull in well over $20 million by the end of the month.

The show?s outsized popularity has again sent the HBO NOW app flying up the Top Revenue charts on the iOS App Store, too. Roughly one month after the Season 7 premiere, HBO NOW became the number one app in terms of Overall iPhone revenue. It grabbed that spot on August 16th, 2017, and remained the top app by revenue for two more days.

That’s pretty good for a service executives had to be dragged kicking and screaming toward, though you’d wonder how much more successful the platform could have been with an earlier start. And while “Game of Thrones” piracy is still booming, and HBO is still sending nastygrams to user ISPs in the hopes of thwarting it, at least HBO is now offering these users a legitimate alternative. An alternative that could provide more value over time if HBO experiments with price, or works on partnerships with smaller ISPs that have been contemplating getting out of traditional cable TV because they lack the leverage to compete with industry giants.

It’s a similar predicament that’s now facing ESPN, which, like HBO, spent years believing it could stand in the wings nursing its cash cow with a dumb look on its face while the entire pay TV ecosystem shifted under its feet. With cord cutting, phase one usually involves denying that the trend is happening, followed by acknowledging the trend but insisting it’s some kind of fad. That’s usually followed by the pretense that you saw and prepared for the trend all along despite all the data showing the opposite. It’s usually good to throw in some make believe about how you’re the one that gets to decide when to adapt for good measure

There’s no doubt that adaptation will make these companies less money over the short term, but executives often struggle to realize a core truth: they don’t have a choice. Cord cutting and the shift to IP video is happening whether these executives like it or not, and they can choose to stand mid-river in futile opposition to the flow, or adapt and take an early hit as the legacy cash cow dies, but be much better positioned for the future, whatever consumers determine they want it to look like.

Filed Under: game of throwns, hbo, hbo now, streaming
Companies: hbo, time warner

Cable CEO Is Really Pissed That HBO Hasn't Cracked Down On Streaming Password Sharing

Overhype

from the get-over-it dept

As HBO’s streaming service popularity has taken off, the company has yet to crack down on the sharing of passwords, believing it’s a great opportunity to have programming junkies market the brand for you. We all of course already knew that sharing HBO Go passwords was a violation of the anti-circumvention clause of the DMCA and an unholy sin. But according to Charter CEO Tom Rutledge, the sharing of streaming service passwords is also a diabolical theft of content that needs to stop immediately.

During the cable giant’s recent quarterly earnings call, Rutledge decided to rant a bit about the perceived injustice of college students using their parents’ passwords, insisting that HBO’s leniency on this front showed a complete misundertanding of the market:

“But to Rutledge, companies like HBO show a “complete lack of control and understanding in the space” by letting password sharing continue, and it’s something that must be stopped. “The lack of control over the content by content companies and authentication processes has reduced the demand for video because you don?t have to pay for it,? Mr. Rutledge said on the earnings call. ?That?s going on in the college market.”

But it’s Rutledge who appears to have shown his lack of understanding of the market he serves. The CEO assumes that if you crack down on college kids sharing HBO passwords that these kids are magically going to go out and sign up for cable connections. What’s more likely to happen should you crack down on the practice is that that these kids (most of whom are on a budget) will turn to cheaper streaming alternatives like Netflix — or piracy. But in traditional legacy exec thinking, everybody’s a criminal, even though Rutledge’s company simply refuses to seriously compete on price.

Earlier this year HBO CEO Richard Plepler said the company keeps a close eye on the password sharing stats, and it’s not really a significant number of people. Plepler (the guy Rutledge implies doesn’t understand the market) a year earlier made it clear he understood the market perfectly well:

“It?s not that we?re unmindful of it, it just has no impact on the business,? HBO CEO Richard Plepler said. It is, in many ways, a ?terrific marketing vehicle for the next generation of viewers,? he said, noting that it could potentially lead to more subscribers in the future. ?We?re in the business of creating addicts,? he said.

So, whereas HBO thinks it’s a good idea to turn the other cheek on a statistically insignificant practice to generate brand obsession, Charter (soon to own Time Warner Cable and Bright House Networks in a $75+ billion merger) thinks it’s a better idea to treat college kids like criminals, and in the process, driving them to Netflix and BitTorrent networks.

Filed Under: cable, competition, hbo, password sharing, streaming, tom rutledge
Companies: charter, hbo