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Dear MG (a note from HBO)

Posted on December 22, 2011 by Jeremy Toeman

We saw your letter yesterday, and wanted to take the time to write you back.

First and foremost we love your content too!  Seriously, you write great stuff, and we generally love all of our fans.  This is why we’re writing to you.  See, the thing you love us for is the great shows we make like Game of Thrones, Entourage, The Sopranos, etc.  And we love making them.  Some might say our brand is at its strongest in recent memory, as we put out some of the best shows on television (though we’ll give a little head nod to our friends at AMC for their impressive content selections in recent years – we wish we had grabbed Mad Men, but… oops!).

See the thing is, the way we get to make these shows is, candidly, by spending a lot of money on trying to be the best (btw – can you believe it’s been 20 years since “Simply the Best” was our theme?  flashbacks!).  Our mutually agreed upon favorite Game of Thrones?  North of $5 million – just to make the pilot!  And the dude writing it hasn’t even finished the whole series yet!  This stuff costs a fortune, and, as you’ve probably seen, they can’t all be winners.

We love that you’d spend $19.99 (or more) to pay for our service, and we wish we could have you as a customer.  But let’s talk about that for a second.  First of all, we don’t have any direct relationship with our fans right now, so when you need customer service, you call Comcast or DirecTV or Cox, etc.  So we’d need to get customer service up and running, and that’s pricey, since, as you know, we’d want our service to be top notch.

Next, we have no method of billing you.  And sure, we can just do some PayPal or an easy Website transaction, but then we’d also need a full authentication framework (we trust you, MG, but let’s face it – not everyone on the Internet is quite so honest).  Today, we just get paid by the cable/satellite companies, and it’s up to them to deal with everything else.

But let’s get to the crux of the issue.  There are about 30-40 million Americans who watch HBO shows legally, and we agree, a lot of them would be happy to pay us directly. If we went, as you put it, “cable-optional,” we’d be breaking our existing, mega-million-dollar contracts with our current partners, and from what we’ve seen, they wouldn’t be too happy about that.  Second, we don’t really know how they’d change their billing relationship with you or other consumers.  Which is going to put a lot of people into a precarious position of having to decide if they really do want to sign up with us and keep paying their cable bill.

This too wouldn’t be a problem if we had a really strong feeling about our ability to recoup the investment. See, we make about $4 billion a year right now.  Yes, that’s right, four, zero, zero, zero, zero, zero, zero, zero, zero, zero dollars.  Oh my is that a lot of zeros.

We’d basically be building a product, from scratch, with no distribution whatsoever (remember we’d have to break all our contracts to be able to run a standalone business, which would put a major crimp in our style of marketing and promotions). And even if our current brands were strong enough to build on, do you think our entire customer base would make the shift?  We don’t, even the ones who love our shows.  We also don’t think this standalone business would actually get us a larger audience than we have today, which means even less people would get to watch our stuff.

So MG, we’d love to have you as our direct customer, but honestly, we can’t afford you.  Can we send you a real crown from the set of the show instead?

-your pals at HBO

ps – just in case its not clear, I don’t really work for HBO, nor would I presume they’d write a letter like this one, nor can I be 100% certain of some data points including subscriber base or ARPU. in other words #satire.

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Posted in Video/Music/Media | Tags: cable industry, HBO, mg siegler, parislemon, satire | 10 Comments
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10 thoughts on “Dear MG (a note from HBO)”

  1. Dalton says:
    December 23, 2011 at 4:44 am

    Why not just make a deal with Hulu? Hulu could extend Hulu Plus to include HBO content at a premium price, and then they’re on the hook for customer service and billing. They’ve already got the infrastructure in place. They’d still be a middleman, but more flexible and less evil than the cable companies.

    Reply
  2. Dave Zatz says:
    December 24, 2011 at 10:15 am

    No way, man – MG is “the best tech writer on the planet.”

    Reply
  3. Mgg says:
    December 24, 2011 at 1:25 pm

    Same old lame excuses. Change your paradigm or get left behind. The days of a hundred bundled channels on cable and sat are coming to an end.

    Reply
    • Jeremy Toeman says:
      December 26, 2011 at 6:05 pm

      Uhm, dude? I don’t work for HBO man… sorry.

      Reply
  4. Pingback: Why HBO should offer HBO GO directly to consumers | TechnicaLee

  5. Pingback: HBO Should Keep Its Programming Exclusive, But Also Offer An HBO GO Stand-Alone Service - Forbes

  6. Pingback: HBO Has Only Itself To Blame For Record 'Game Of Thrones' Piracy - Forbes

  7. Alan Wolk says:
    May 11, 2012 at 12:57 pm

    Just saw the Forbes update crediting you for dispelling the faulty notion that HBO could somehow sell independent subscriptions just because a lot of college kids don’t want to pay for it. (Though several commenters noted the ease with which a single HBO subscription can be shared within a family… surprised that hasn’t caught on.)

    HBO is also a huge promotional tool for pay-TV providers. (3 free months of HBO with signuo/upgrade your internet and get free HBO/etc.)
    Not something they’d willingly give up.

    Reply
  8. Pingback: Why HBO Can't Afford To Offer A Stand-Alone Streaming Service - Forbes

  9. Pingback: HBO GO | NOW | Later

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Jeremy Toeman is a seasoned Product leader with over 20 years experience in the convergence of digital media, mobile entertainment, social entertainment, smart TV and consumer technology. Prior ventures and projects include CNET, Viggle/Dijit/Nextguide, Sling Media, VUDU, Clicker, DivX, Rovi, Mediabolic, Boxee, and many other consumer technology companies. This blog represents his personal opinion and outlook on things.

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