An imagined interview with Richard Plepler, CEO of HBO
Q: Thanks for sitting down to talk with me today, Richard.
A: No problem.
Q: I mean it. For a–let’s say–relatively unknown blog like mine, with a monthly average of 2.4 readers, getting an exclusive interview with the CEO of a huge media company like HBO is, well… it’s almost as exciting as that time I called out Gruber for making a spelling error.
A: Er… okay.
Q: So let’s get down to it. Game of Thrones. Great show, I’m sure you’ll agree.
A: The viewers certainly think so.
Q: So let me toss this out to you. I’m 27 years old. I’ve never paid for cable TV in my life.
A: I hope you weren’t stealing it. (Laughs)
Q: No, no. My parents paid for it, for a time, when I was a kid. I mean, what am I gonna do, spend my allowance on that? I’d be mowing lawns a long time. But no, my parents subscribed to it for, oh, I don’t know how long, probably since before I was born. I used to curl up on the La-Z-Boy in the basement in my pyjamas and watch Nickelodeon. Good times.
A: It’s a part of our culture.
Q: You could say that. So my parents dropped cable after a while, I don’t know why. Tough economy I guess. But then when I went off to college, we had it for free, in our rooms. I guess technically we were paying for it as part of the cost of board, but we didn’t have a choice, and anyway I’m sure the cable company gave the college a big discount, right?
A: (Laughs) That’s how they get you hooked.
Q: Sure. Sure. I would watch Battlestar Galactica and The Daily Show. Those were the only two shows I watched, but I enjoyed them. Especially Battlestar. Not many shows like that these days.
A: You should see what we’re running lately.
Q: On–
A: On HBO, yeah. (Laughs)
Q: Sure, yeah. So anyway, I graduated, and Battlestar ended. And I bought the DVDs and everything, but–I don’t know–it just never really even occurred to me to subscribe to cable after I left the dorm. I mean, why would I? For two shows, one of which was over?
A: I hear you. We get that. We’re doing the market research. We’re thinking it through.
Q: Sure. So I’ve watched some shows since then. Mainly network television. Castle is bearable sometimes–at least it’s got Nathan Fillion. But there’s Hulu for stuff like that now. Ten dollars a month to watch it on my TV, or less if I don’t mind hacking their stupid leaky paywall.
A: We’re aware of those things. We’re watching those services closely to see what happens.
Q: So here’s the thing. Game of Thrones. Bought the first two seasons on iTunes, liked it a lot. How do I watch season three?
A: Well, I guess you gotta subscribe to HBO! (Laughs)
Q: Right. But the point I’m trying to make here is that, it’s not a question of upselling me on a premium package for my existing cable, because I never had that in the first place. And it’s not a case of you losing a customer that you now have to get back, have to draw back into the fold, because you never had me as a customer. You never had a lot of people my age, as customers. Sure, I watched it when it was free, but that was all. And now, even if it was free, I probably wouldn’t want it. Watching TV on someone else’s schedule is inconvenient. I’m grown up, I’ve got a job… my time is valuable! I want to be able to choose when to start it, and be able to pause it at any time.
A: Well, as you probably know, there’s the HBO Go app for that now. On the iPads. You can even–what’s it called? (Gestures)
PR Aide: AirPlay.
A: You can AirPlay it, onto the TV. From the app.
Q: OK. Fine. But then how do I get HBO Go?
A: Well, if you call your cable company, I’m sure they’ll help you out.
Q: Okay. So they’re going to charge me–what, like a hundred dollars, or more? A month? And send a cable guy out here, to install something? I don’t want the cable guy installing anything. I don’t want some guy plugging some box into my TV that I’ll never turn on.
A: (Laughs)
Q: I’m serious! I literally do not want this service, even if it’s free. I just want that one, that single part of it, that one show, on HBO Go.
A: Well, we’re aware that there’s a demand for it, but see, we have to look at the numbers to make sure it’s going to work out…
Q: Okay. So let’s take that number there, call it a hundred dollars. That gets me–what? Basic cable, plus HBO. And the HBO Go app is ‘free’, on top of that, right? That last part is the only part I want. But I could have that, right now, for a hundred dollars a month, right?
A: Sure.
Q: So… I know you don’t want to ‘unbundle’ stuff. I know that’s against your business model. And I don’t know exactly what your numbers are, because I know that’s all secret and competitive. But let’s assume for the sake of argument that the cost I would pay for HBO, out of that hundred dollars, maybe it’s 30 dollars or so? Let’s assume that that 30 dollars that shows up on my cable bill for HBO, that’s not all that HBO is getting from the cable company in exchange for having me as a subscriber. You’re getting some kind of extra kickback from the cable company, on top of that 30 dollars, that makes it more lucrative. And you’re getting free promotion from them, and other intangibles like that. You don’t have to market your channel at all, because the cable companies do it for you. Is that about right?
A: That’s not far off.
Q: So let’s say I just take that hundred dollars, and I pay it all to you, directly, instead. I don’t want any of that basic cable junk, I don’t want the stupid box, I just want HBO. So can I do that? You wouldn’t possibly be losing out in that scenario, would you?
A: Well, no. But I guess, well, I guess we just don’t think very many people would pay 100 dollars per month for just HBO. (Laughs)
Q: No, I don’t think so either. And in truth, I wouldn’t pay that much. I mean, Game of Thrones is good, but it’s not that good.
A: (Laughs)
Q: But, here’s my next point: There’s some number in between there, more than the 30 dollars you get from me for my HBO subscription now, but less than the 100 dollars total I would have to pay to actually get HBO considering I currently have no cable at all. There’s some number in that range where you’d still be doing okay. Isn’t there?
A: Yeah. But I don’t think you’d like that number either.
Q: Maybe not. But I gotta think–let’s call it 50 dollars. Or 75. I have to think, if you made that available, for 75 dollars, just access to the HBO Go app, nothing else, no requirement for a cable subscription–someone would buy that. Maybe not a lot of people! Maybe not even me. Almost certainly not me. But I bet someone would.
A: You’re probably right.
Q: If for no other reason, than to stick it to the cable company. People hate the cable company.
A: (Laughs)
Q: So why don’t you do that?
A: Well, like I said–we don’t think many people would pay that much for just HBO.
Q: Sure. But you already have HBO Go–you already operate that service. So it wouldn’t cost you anything to develop it or to provide it. That part is already done. It would just be some easy money. Not a lot, but some. So what exactly do you have to lose by offering it? Price it absurdly high if you want. You don’t have to promote it at all–people will find out by word of mouth. See how many sign-ups you get. You might be surprised.
A: Well–you see…
Q: Play around with the price a bit. See how it affects the numbers. You might just find that, at some point, you don’t even need the cable companies any more. Maybe not! Maybe I’m exaggerating. But this seems like there is zero risk here. And, you know, everyone else seems pretty sure that this Internet thing is gonna be the future, real soon now. What exactly is holding you back?
A: (Long pause) You know that HBO is a wholly-owned subsidiary of Time Warner, right?