MAD Perspectives Blog

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 HBO Playing Catch UP

Peggy Dau - Monday, October 27, 2014

October is being hailed as a milestone month for TV due to the announcements from HBO and CBS regarding their direct-to-consume streaming services. It is generally agreed that the motivation was money (isn't' it always?) and a desire to align with the needs of their respective audiences. However, not much has been written about the need to stay relevant; or, the benefit of actually having a direct connection with their audience.

The evolution of televised content is storied. In fact, it's time for someone to tell the story of Cable and Pay TV (a la Ted Turner and John Malone), in the style of Mad Men regaling the exploits of ad men during advertising's golden age or AMC's lesser known, but equally compelling series, Halt & Catch Fire which dramatizes the birth of the personal computer revolution. The use of satellites to deliver content to cable head-ends forever changed our TV viewing experience. Thanks to HBO and Ted Turner, we were able to access premium movie content and 24 hour news in our homes. 

Even with HBO's creation of original content in its early days, it was primarily known for delivering marquee sports events (e.g., 1975's "Thrilla in Manila between Muhammad Ali" and Joe Frazier) and Hollywood movies. It's notable original content emerged during the 1990s with The Larry Sanders Show, then followed by Curb Your Enthusiasm, Sex and the City and so on to today's Boardwalk Empire and Game of Thrones. Broadcast networks were forced to take note when HBO garnered award nominations and ultimately began winning the lion's share of the annual awards for quality content.

HBO set the stage for quality drama and comedic series. They established a high standard for cable networks, many of which simply syndicated broadcast television content. Struggling USA Networks succeeded in a turnaround resulting from producing character-centric original programming such as Monk, Burn Notice and White collar. Other networks have subsequently followed suit, syndicating content for daytime hours while offering original programming during primetime.

However, it was Netflix who set the stage for the current upheaval. HBO will always be known for a Pay-TV business model enhanced by producing original content to attract subscribers. But, Netflix initiated the use of subscriber data to capitalize upon audience search and consumption patterns to produce content to fulfill their desires. This is the benefit of a streaming service. The direct connection to consumers that Netflix and Amazon has not only allowed fans to consumer content based on their schedule, they have also enabled the concept of binge viewing. No longer must an audience wait for the weekly broadcast of Homeland or The Good Wife. They can enjoy an entire season over a weekend, if they choose.

HBO and CBS will certainly appreciate bumps in their revenue streams, but they will also gain much greater insight into audience behavior. Their ability to capture and analyze fan reaction and resulting behavior will enhance their ability create content that viewers want to watch. Certainly, they have already been monitoring social networks to gain insight into the real-time emotions of their audience. Of course they seek superior original content that aligns with market trends for all things fantasy, sci-fi or vampire oriented (although don't we have enough blood suckers on-air already?). But, that is not enough.

Much of Netflix's success comes from their well-documented obsession with data. This is where HBO must play catch up, solely because they have been missing one important dimension of data - the insight that comes from having a direct streaming relationship with subscribers. Understanding how subscribers discover the content they wish to view and correlating that data based on previous content consumed, genre, actors, time of day, month or other demographics, deliver incremental value to content producers. Content strategies, scheduling, pricing, talent - they may all be impacted by the data collected. And, in return they may instigate further data. HBO is certainly not suffering from a lack of quality programming. To maintain relevance in a world where consumption patterns are changing dramatically, HBO must play catch up in offering a streaming option, if only to capture the relevant data.

What's your perspective?