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Time Warner CEO Jeff Bewkes Defends HBO Now Pricing

8 Mar, 2016 By: Erik Gruenwedel

Executive says streaming service has no plans to cut the $15 fee to match Netflix, Amazon Prime Video or Hulu Plus

At $15, HBO Now is the most expensive domestic standalone subscription streaming service — 87% higher than Hulu Plus, 82% more than Amazon Prime Video, 66% greater than Netflix, and 36% above Showtime OTT.

Yet with more than 800,000 paying subs since its launch 10 months ago, HBO Now remains a key driver for the brand, which includes pay-TV, according to Time Warner CEO Jeff Bewkes.

Speaking March 8 at the Deutsche Bank 2016 Media, Internet & Telecom Conference in Palm Beach, Fla., Bewkes said pending platform launches on Xbox and PlayStation wouldn’t mandate lowering the price. Some critics contend the HBO Now price is at a disadvantage to current affiliate HBO pricing.

“We think it’s working very well at this price in relation to [pay-TV] packages that most American homes have. There has not been cannibalization this year of HBO Now [sub] adds [compared] to the basic HBO [pay-TV] packages. We’re not trying to pursue the lower-priced strategy that some of the syndication VOD services have.”

The last two years have produced the highest HBO sub growth rate over the past 30 years, according to Bewkes, who said HBO Now’s strategy targeting 12 million broadband-only homes as well as 70 million basic pay-TV households is a win-win.

At the same time, the executive said there are no contractual restraints with pay-TV operators that preclude HBO Now from lowering the monthly price.

“If we think [HBO Now] would be optimized with different packaging or pricing we can pursue that,” he said.

In response to concerns about content quality on HBO Now, Bewkes said the platform is spending more than $2 billion this year on programming, including $1 billion on original series. The platform will see original series global hours increase 50% to 600 hours. New content includes “Sesame Street,” outspoken personalities Bill Simmons (from ESPN), Jon Stewart, and Vice news programming aimed at millennials and broadband product.

“We don’t think it’s to HBO’s advantage to join the other three or four SVOD services that are essentially doing broad reach syndication services. Admittedly, they’re adding [original programming], but they’re essentially doing a syndication product,” Bewkes said. “We do have a very strong current theatrical film offering at HBO that nobody else has. [Movies are] a very important part of subscriber use of HBO.”


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