His well documented that Blockbuster’s dominance in video rentals was the impetus for the launch Netflix. What’s less known is that it was also the catalyst for HBO’s shift towards original programming, according to former HBO and Time Warner CEO Jeff Bewkes.
HBO, which stands for Home Box Office, focused its primary consumer offering on delivering unedited theatrical movies to residential homes. Debuting in 1972, HBO charged a monthly fee to allow consumers to watch full-length movies at home without promoting. While other premium networks offered similar products comparable to Showtime, Encore, and Starz, HBO continued to gain subscribers in the Nineteen Eighties by offering movies together with a little bit of live boxing, comedy shows, and concert events.
First Blockbuster opened in 1985. Within the late Nineteen Eighties, Blockbuster undermined HBO’s business offering. Consumers now had a distinct way to watch uncut, ad-free movies at home, and now they might achieve this on demand. HBO only airs one movie at a time. Blockbuster offered hundreds of films. Film studios saw the rental market as a booming industry and offered Blockbuster their movies six months before the HBO window.
“Movies were our No. 1 sales,” said Jeff Bewkes, former CEO of HBO and Time Warner, who spoke to CNBC as a part of a digital documentary about HBO’s history. “We’re sitting on HBO and we’re like, ‘We’re screwed.’ Our principal reason people want to subscribe to HBO right away is due to Blockbuster. What are we going to do?
HBO, then led by Michael Fuchs, decided original programming was the reply. With only a number of million dollars to spend, Fuchs placed two small bets on two original sitcoms: Dream On, which premiered in 1990, and The Larry Sanders Show, which premiered in 1992.
“It almost blew our budget,” said Bewkes, who joined HBO in 1979 and headed the network from 1995 to 2002. He later became the CEO of Time Warner, HBO’s parent company. “We called it the most effective hour on TV. But I used to correct Michael [Fuchs] about it: “Yeah, the most effective hour on TV – it’s literally almost only one hour because we only had 10 half-hours a yr of ‘Dream On’ and ‘Larry Sanders’.” We had 10 hours of significant programming. We’d repeat things until we were sick.”
While HBO had dabbled in original content before, including releasing Jim Henson’s “Fraggle Rock” in 1983, “Dream On” and “Larry Sanders” were HBO’s first two adult hits. Each shows ran for six seasons and ushered in the golden age of HBO’s original programming, setting the stage for Sex and the City, Oz, and The Sopranos, which first aired in the late Nineteen Nineties when Bewkes was HBO’s CEO.
Tony and Carmel Soprano.
Source: HBO | Youtube
Even after The Sopranos debuted, HBO still struggled with how much to invest in original programming. HBO’s TV schedule has at all times modified, depending on the length of feature movies. While network shows at all times aired at a certain time, HBO did not have that luxury. It also lacked consistent introductory programs to entice viewers into recent shows, as NBC famously built with its Thursday “Must See TV” show featuring shows like “Seinfeld”, “Friends”, “Mad About You” and “ER”. “in the 90s.
HBO handled the “on-demand” advantage of Blockbuster and differentiated itself from network television by constructing the technology that made previous episodes available to subscribers. HBO On Demand began in 2001, allowing subscribers to atone for previous seasons of shows and construct larger episodic audiences for series.
Jeffrey Bewkes, former CEO of Time Warner Inc. and HBO.
Krzysztof Morin | Bloomberg | Getty Images
“It allowed us to do a protracted form,” said Bewkes. “It gave us the chance to do completely various things. Now we will make shows like Band of Brothers, The Sopranos – something that is sequential. In case you didn’t watch the show last week, you possibly can watch it this week.”
Blockbuster turned out to be an organization that would not get well from the collapse. In 2010, he declared bankruptcy. AT&T acquired Time Warner in 2018. Changing its name to WarnerMedia, AT&T sold the unit as a part of its merger with Discovery Communications last yr formation Discovery Warner Bros.
If HBO’s early investments in original programming had missed the mark, Bewkes admitted he wasn’t sure what HBO would have done to fend off Blockbuster.
“Thank God for these shows [hit]Bewkes said. “In the event that they had missed, I do not know what the hell would have happened.”
Disclosure: NBCUniversal is the parent company of CNBC.
WATCH: Full interview with former Time Warner CEO Jeff Bewkes on the evolution of HBO