The HBO Empire and “The Business of Creating Addicts”

HBO EntertainmentJennifer Holt’s Empires of Entertainment: Media Industries and the Politics of Deregulation (1980-1996) is certainly a successful and exhaustive journey into the depths of American entertainment as we know it today. Firmly rooted in political and economical details and evidence, Empires of Entertainment closely examines the slow process of deregulation that worked its way through various media industries, primarily film and cable broadcasting, and the subsequent emergence of industry synergy.

Holt writes in her Introduction:

…The process of empire building in any context—ancient or modern, political or cultural—is about amassing power and centralizing control. (4)

Holt’s definition is apt in so far as media empires go, and more specifically, HBO. In Chapter 1: 1980-1983, Film versus Cable, Holt establishes the context of the war between film and cable in her reference to HBO’s multiple confrontations with film studios and The Department of Justice (DOJ). The disputes in the early 1980s would prove to both solidify HBO’s Pay-TV market dominance and simultaneously reify the film industry’s dependence on the cable industry. The film industry, perhaps the most dominant form of entertainment for decades, suddenly appeared to be the little brother of the booming Pay-TV movement triggered in large part by HBO. This is exemplified in the studio’s appeal to the DOJ in 1979 to investigate HBO’s business practices, which was completely turned around onto the studios. According to Holt, as a result of the studio’s attempted attack on HBO, the DOJ sued the studios for aiming to create their own private cable distributor, thus blocking the market (as the film giants had done in the past).

In this instance, Holt writes:

…HBO benefited from this distinction and their perceived ‘outsider’ status in relation to the major studios… (26)

The crucial word here is “perceived”; in reality, HBO played a crucial role in bonding the film and cable industries, working towards eventual deregulation. This is apparent in the company’s role in financing Hollywood films, an economic tactic that proved to benefit HBO greatly. Holt notes that HBO’s film financing worked to both undermine the studio’s hegemonic grasp of the industry while also asserting itself as an integral part of Pay-TV.

In the words of HBO Chairman Gerald Levin in 1983:

HBO is now the largest purchaser of motion picture rights in the world. But it is not simply a pay TV network anymore. It’s  kind of a new style merchant bank. (28)

Using Holt’s timeline of HBO’s involvement in both the film and cable industries, it becomes clear that HBO was, in a sense, adopted by the United States government and consumers and as a result, was nurtured and protected throughout those formative years. In fact, it was this sheltered childhood that would push HBO to become the dominant media empire that it is today.

However historically accurate and careful Holt’s account of HBO’s infancy is, in the modern day, the company seems to be contradicting certain defining factors of an empire (according to Holt’s previous definition). Surely HBO has succeeded in “amassing power”, this cannot be denied. Their power is reasserted everyday through various mediums, and maybe even goes unrecognized occasionally. The real issue lies in the company’s “centralizing control”, or perhaps more accurately, their conscious decentralization of this control. A prime example of this effort was emphasized in some comments made by HBO CEO, Richard Plepler, in a BuzzFeed interview with Peter Lauria on January 16.

HBO has seemingly come full circle in it’s relationship with the cable industry; the company is now grappling with the process of “cutting the cord”, in other words, freeing itself and its users from cable subscriptions. However, I am less concerned about this cutting the cord movement (you can read what Sam has to say about it here) and more concerned with the company’s intentional ignoring of user password sharing.

In regards to the trend of password sharing, Plepler admits:

It’s not that we’re unmindful of it, it just has no impact on the business, [it is a] terrific marketing vehicle for the next generation of viewers.

Plepler is quick to share HBO’s tactics, or lack thereof. In fact, HBO turning a blind eye to user password sharing is in large part responsible for what Plepler calls, “the ability to pivot”, within the market. In this instance, HBO is consciously allowing subscribers to undermine their centralized control in order to amass more power in the future.

As Plepler fittingly says:

We’re in the business of creating addicts.

After decades of market dominance, mostly thanks to the company’s protection in the early days, HBO has finally become so powerful and diversified that they can willingly surrender to their customers. Perhaps this is solely an attempt to give their customers a sense of safety in an effort to ensure their business in the future. HBO is a true genius in the film and cable marketplace. They understand, unlike the studios in the 1980s that so fervently attacked HBO, that they must be able to pivot and adapt in order to keep people hooked. So far, it’s working.

Finally, here is Plepler’s interview with BuzzFeed:

Featured image can be found here: http://www.theyoungfolks.com/wp-content/uploads/2013/10/HBO.jpg

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Comments

  1. I think your point about HBO’s tolerance of password sharing for HBO Go in mind is really interesting, but I wonder if we need to think about the missing link in the delivery chain that you describe. For instance, you characterize their “turning a blind eye” to sharing passwords as a decision that “consciously allow[s] subscribers to undermine their centralized control in order to amass more power in the future.” What might be worth thinking about is whether the ‘centralized control’ that this tactic undermines is, in fact, HBO’s. Assuming Plepler is right (and I’m sure he is) about the fact that subscribers who share passwords with non-subscribers have “no impact on the business,” I can’t help but think he has chosen his words very carefully. The phrase “the business” stops short of “profits”, and it usefully avoids naming the actual business that must surely feel some impact: not content producers, but content distributors.

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