Bewkes: HBO OTT Will Expand Premium Reach

Says Service Will Address 70M Homes Not Currently Subscribing

Time Warner chairman and CEO Jeff Bewkes said Home Box Office’s plans to offer an over-the-top service directly to customers next year will open up the premium service not only to the 10 million broadband-only homes in the country, but should attract a large chunk of the 70 million basic cable customers that don’t subscribe to the channel.

HBO unveiled plans for the OTT service in October, which will initially be marketed in conjunction with the channel’s distribution partners to the 10 million broadband-only homes in the country, generally younger customers that subscribe to SVOD services like Netflix, Amazon and Hulu.

Bewkes, speaking at the UBS Global Media & Communications conference in New York Tuesday, said the bigger opportunity for the service is in the 70 million cable, telco and satellite basic service homes that don’t pay for HBO.

“Ten or 15 million of those homes ought to have HBO,” Bewkes said. “They just haven’t been marketed a package or offer in a way where they found it  easy to sign up.”

Bewkes didn’t offer many details for the service past that it will be launched next year and that HBO will join with its distribution partners in a national marketing plan for the service, the first the channel has been involved in several years. Bewkes added that part of the plan is to convince distributors that they  are leaving money on the table by not promoting the OTT service, which could cause subscribers to increase their broadband service to accommodate more video streaming.

“These are giant infrastructure planes,” Bewkes said of cable and telco TV operators’  broadband plants. “It’s  crazy to fly planes with nobody in the seats.”

On demand content is the future of the business, he said, adding that it has “brought the vitality back to television.” But he added that TV Everywhere hasn’t yet lived up to its potential, adding that the industry hasn’t attracted younger viewers because it has dragged its feet in making content available on all devices.

While that has mainly been a rights issue in the past, distributors and programmers are beginning to see the value of true TV Everywhere functionality and more and more distributors are making full seasons on shows available on demand. But there is still more to do.

“Distributors all paid for the programming,” Bewkes said. “It’s all there. Let’s make it available.”

Bewkes also touched on recent ratings softness at his networks and others, adding that while he guessed the declines are due in part by increased video on demand and Subscription video on demand usage, as well as an inability to accurately measure viewers who watch shows on tablets and smartphones.

But he said new measurement techniques are coming and he didn’t see the declines as part of a broader secular trend. People are still watching, they’re just watching on different devices – as an example he pointed to Time Warner’s younger skewing CW network, where he said ratings would be 10% higher if tablets and smartphones were counted among the mix.

Still, Bewkes said that the ratings slide at Time Warner’s Turner networks weren’t all the fault of outside forces. He said that the network, which has made its name through original shows and by running reruns of broadcast network shows like Law and Order and the Big Bang Theory, miscalculated a shift in viewer and advertiser tastes.

“Over the  last few years what’s happened, the attention of viewers and a certain amount of the demand from advertisers moved toward more breakthrough, somewhat more controversial in terms of content original programming, which wasn’t supported by advertisers a few years ago and now it is,” Bewkes said. “We were a little late in moving over because we were doing so well.”

Bewkes added that even its successful original programming like Rizzoli & Isles and Major Crimes, some of the biggest shows on cable, “skew a little older, a little more female in some of those cases. We don’t want to lose those audiences, we do want to add to them.”

He added that newly hired TBS and TNT president Kevin Reilly has a track record of doing just that at other networks like FX.

“I’m going to be very surprised if we don’t surprise all of you,” Bewkes said.