Bewkes: 'Negative' Pushback on HBO OTT Video Service Exists10 Mar, 2015 By: Erik Gruenwedel
Time Warner CEO says TV Everywhere has reached ‘inflection point’
HBO’s pending launch of over-the-top video service HBO Now is not without its detractors within the multichannel video program distribution ecosystem, Time Warner CEO Jeff Bewkes told an investor group.
HBO Now, which launches in April exclusively on Apple TV for $15 a month, marks the second time (after ESPN on Sling TV) a major premium content bundled channel is being marketed direct to broadband-only consumers.
Speaking March 10 at Deutsche Bank Media, Technology & Telecom confab in Palm Beach, Fla., Bewkes admitted to some pushback from traditional MVPDs regarding HBO Now since it was first announced last October. While saying the majority of distributors have realized the importance of digital distribution, control of that distribution is what fuels naysayers.
“There are a few that have been kind of negative about it,” he said. “Most of our distributors are on board with us and will push [HBO Now]. We have some [distributors] that think [the service is] competitive and that they wish they could have maintained sole [access] to HBO.”
The executive thinks the detractors will come around when they realize OTT video is in their best interests as both a marketing and distribution tool of pay-TV. He added that the margins around HBO are big enough to satisfy all parties.
“They simply have to be more vigorous about it,” Bewkes said.
At the same time, the executive reiterated that MVPDs have held the keys to digital access through TV Everywhere for some time — with little effect. Bewkes cited Comcast’s rollout of Xfinity TV as proof on-demand TV and video can succeed. At the same time, he admitted rollout of the concept has been too slow.
“I think we’re near an inflection point [on TV Everywhere],” he said. “The old distribution industry has essentially not fully offered to consumers with a good interface programing on a VOD basis.”
Bewkes said ongoing market proliferation of Netflix, Amazon Prime Instant Video and Hulu Plus domestically underscores the importance and value of streaming video.
“That’s going to make the [MVPDs] do it,” he said.
The CEO said the decision to go after 10 million broadband-only consumers was a reflection of the times and changing viewing habits of a younger demographic. In addition, HBO Now will target 70 million domestic pay-TV homes currently not subscribing to the premium channel.
He said HBO chose Apple due to its global brand awareness and distribution prowess around connected devices, including the iPhone and iPad.
“That’s a tremendous partner for us,” Bewkes said.
The CEO said wider consumer adoption of video-on-demand and subscription streaming is creating greater distribution opportunities domestically and abroad — much of it spearheaded by HBO.
He said changes in content distribution are both exciting and terrifying.
“We’ve seen how powerful VOD is in the old cable multi-channel world … where HBO was the first on VOD,” Bewkes said. “The way we see it now, the upside from bringing you your favorite video program is going to create more opportunity than a problem.”
He said VOD has helped elevate the value of serialized dramas, underscored by the popularity of “The Sopranos,” “True Blood,” “True Detective” and “Game of Thrones,” among others. That’s because viewers can access the programing on their own time schedule.
As a result, Time Warner properties including Warner Bros., Turner and HBO have renewed focus on stacking content rights globally based on available distribution windows.
“What you’re seeing across the world [through SVOD and OTT video] is essentially the explosion of VOD,” Bewkes said. “All of this is leading to higher value for quality shows.”