A highlight of last week's VideoSchmooze:NYC Online Video Leadership Forum was the leadoff fireside interview I did with Eric Kessler, HBO's co-president. Our conversation focused on HBO GO, the streaming app that HBO officially launched on May 1st, which has received approximately 5 million downloads to date.
In the interview, Eric offers a comprehensive explanation of how HBO's business model works and the value-added role that HBO GO plays in extending subscribers' life-cycle. He provides a slew of new data points on HBO usage by content type and device, as well as how it's changing subscribers' perceptions of HBO. Eric also notes that the most critical decision HBO made was to include virtually all of its programs' episodes in HBO GO, although the move undermined its lucrative home video/DVD business for a segment of buyers.
Importantly, Eric describes why HBO views the pay-TV ecosystem as so critical to its success and how cord-cutting hasn't affected HBO at all yet. On this point, HBO also has no plans to offer HBO GO as a standalone app without requiring an underlying basic pay-TV subscription. Further, as compared to other cable networks that have licensed their programming to over-the-top (OTT) streaming aggregators like Netflix, Amazon and others, HBO has no intention of doing so, and Eric explains why HBO considers exclusivity so critical to its success.
Overall, I think the interview provides incredibly thorough insight into how HBO sees its business evolving in the broadband era. HBO is clearly seeking to mine the value of digital distribution and new viewing devices while also preserving its business relationships with traditional distributors. The interview runs approximately 40 minutes.
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