HBO is an American pay TV network and a subsidiary of Home Box Office Inc. (itself owned by Warner Bros). The HBO network was launched in November 1972 and is now the longest continually operating television subscription service in the United States.
Understanding HBO’s business model
HBO utilizes a subscription-based business model where users pay a fee to watch content. The company produces content itself which is then distributed to subscribers across its television channels and on-demand streaming service.
One of the key components of the company’s business model is its focus on quality over quantity. Unlike most other television networks, HBO produces a relatively small number of original programs each year, but what it does produce tends to be of very high quality. This approach allows HBO to attract subscribers who are looking for more than just the typical network television fare.
To that end, the network has produced several critically acclaimed series over the years. These include Game of Thrones, The Sopranos, Sex and the City, The Wire, and Curb Your Enthusiasm. However, this is not to say that HBO does not license content from other networks and studios. In recent years, it has expanded its streaming services via partnerships with Amazon Prime Video and Hulu to name a couple.
Nevertheless, HBO’s reputation for premium, self-produced content lends a degree of exclusivity to its brand. Viewers value HBO’s various networks and services because it is often the only place the content can be accessed.
With services such as Netflix taking subscribers away from premium cable networks, HBO now also relies on an ad-based model to drive revenue. Users with a free subscription will be shown ads before and during movies and television shows in a standard commercial break format.
Those with a paid subscription can access a commercial-free service, but HBO may still make money from product placement deals in the movies and TV shows themselves. This is standard practice among large studio networks and streaming companies.
Branding and marketing
A sometimes overlooked (but no less important) aspect of HBO’s business model is transmedia storytelling – a technique that involves telling a story across multiple platforms and media, such as books, films, television shows, websites, games, and social media.
Game of Thrones is one such example, with HBO creating an entire universe around the show that incorporated a mobile game, web series, and a variety of social media platforms.
The mobile-based Game of Thrones: Conquest allows fans to build and manage their own kingdoms, while the web series History and Lore provides additional background information on the show’s world and characters. These are free to play and watch, but HBO relied on fans paying to watch Game of Thrones to add context.
Put another way, transmedia storytelling supports the idea that HBO offers premium content that is worth the price of admission. The technique also aligns with HBO’s famous catchphrase “It’s not TV, It’s HBO” which was first introduced in 1996.
- HBO is an American pay TV network and a subsidiary of Home Box Office Inc. The HBO network was launched in November 1972 and is now the longest continually operating television subscription service in the United States.
- HBO utilizes a subscription-based business model where users pay a fee to watch content. Depending on the subscription, users may also be subject to commercial breaks with ads and more subtle product placements.
- HBO also uses transmedia storytelling to create buzz around new content and encourage users to pay for a subscription to derive maximum benefit.
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