HBO will lead AT&T’s challenge to Netflix

IN LATE 2012, just before the release of “House of Cards”, Ted Sarandos, chief content officer of Netflix, declared: “The goal is to become HBO faster than HBO can become us”. Few took him seriously. HBO had a globally recognised brand with some of the best programmes in television, including “Game of Thrones”. Yet Netflix would go on to surpass HBO in subscribers, money spent on programming and, this year, Emmy-award nominations.

Meanwhile HBO did not try to become Netflix. It prioritised profits over growth as Jeff Bewkes, then chief of Time Warner, HBO’s parent, looked to sell the company. HBO achieved enviable operating-profit margins of 30-40% ($2.2bn on $6.3bn of revenue in 2017), and was comparatively restrained in its pursuit of high-profile shows (Netflix committed $100m in outbidding HBO for “House of Cards”, and was ridiculed for it). The network also lagged behind in the technologies of personalisation and streaming...



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