An interview with Bernadette Aulestia, the woman expanding HBO beyond cable

Ben Popper: HBO Now has been in the market for about three months now. What has been the most interesting or exciting thing you've learned?

Bernadette Aulestia: For a long time there was a debate about "cord-cutters": do they really exist? As an industry, we’ve finally arrived at a point where we can acknowledge they exist and grapple with that reality. The big question with HBO Now was, is this going to cannibalize our existing subscriber base in any way? There’s nothing better than, three months later, having data and being able to say less than one percent of people cut the cord and went streaming only.

How does the HBO Now audience compare to your traditional demographic?

We thought this would reach a much younger demographic than the traditional HBO subscriber, who pays a fair amount of money to get us. The data shows we are hitting exactly that audience. It’s younger and overwhelmingly broadband only. Whether you viewed us through your parents' television, or your parents' password, it's clear we've established a brand affinity. Now we have an offer that works for those consumers. The average HBO subscriber is 43, and the average NOW subscriber is 35, so that’s a significant drop.

How many people have signed up so far?

We aren't going to share numbers on that, but I think it's been quite public that since launch we have been at the top of the App Store charts for downloads and consistently as a top-grossing app. We assumed that there would be pent-up demand, and the response did not disappoint.

For a transactional premium business like us, anywhere you have millions of potential consumers is an opportunity. So regardless of how small the cord cutting audience might seem when weighed against pay TV, for us, if there are 8 to 10 million consumers we can bring in to buy premium content, that’s a big opportunity.

How do the cable companies that distribute HBO feel about all this?

Most of those companies are not just cable companies, but broadband providers as well. They have the incumbent advantage of a wire into your home. In terms of some of the conversations we’ve had with our network of distributors, it’s been about how do you best use this product to reach a new generation of customers that might be broadband only. We’re saying, use HBO Now as an entry point. Use us as the carrot to get customers, and perhaps later on you can sell them television as well.

Has the launch of Now affected the number of people watching HBO on other platforms at all?

There were two major concerns. Churn is one. As we said, it seems that less than 1 percent of people left cable for HBO Now. The other is, will this in any way affect the performance of people watching our traditional linear programming, our on demand offerings, and HBO Go. The answer so far has been no. This recent Game of Thrones run, our linear ratings were up, our on demand viewership was through the roof, and our Go usage was a new record.

It was really interesting to see what happened with Go. There was this side effect of launching Now. Only about half of our traditional HBO customers ever bothered to register for HBO Go. Having HBO Now in the marketplace seems to have really increased awareness. We saw a big jump in new registrations. These are people who are just realizing, "Aha, I have this thing! I pay for cable, so I can now get HBO anytime, anywhere I have an internet connection and a screen."

You had some issues with outages during big streaming events on HBO Go. What did you do differently for Now?

Having had the history with a couple of hiccups, we wanted to ensure, on Sunday night, the premiere of Game of Thrones was flawless. With HBO Now, we worked with MLB Advanced Media, BAM. The reason we went with BAM was their experience. There is nothing bigger right now than live-streaming sports in terms of concurrent streams. Game of Thrones is our World Cup. So we felt very confident with the caliber of support they would deliver, and it lived up to those expectations.

Today you rolled out HBO Now to a bunch of new services. What's the game plan going forward in terms of distribution?

The big one for us is Android. It’s what consumers have been clamoring for most. It has been interesting to see how loud they were about Chromecast. I think that goes back to, people still want to see this programming on the big screen in their house. The end goal is to get HBO Now to parity with HBO Go in terms of the number of different devices we support.

Now that you have these digital platforms, are there plans to experiment with new programming formats or offer certain things that are digital first or digital only?

We are doing lots of work internally from a research standpoint. There is a lot of stuff in development as we speak.

People expect special from us. How do you bring that in a digital environment that allows for deeper interaction and connection. We’re at a point now where we have show runners and creatives coming to the table with their own thoughts about the format, so expect to see more soon.