HBO needs to learn it's content first


Poor HBO doesn't get the value of its content. Instead, it believes it should hoard its content and use its own HBO Go service to distribute it outside of the confines of cable. Truth is they could make much more money with wider distribution, especially with older content, because their true value is in the content, not the distribution.

Last week, Reed Hastings from Netflix suggested his company wanted to buy access to HBO's popular content. HBO quickly put that rumor to rest in no uncertain terms. A Reuters report quoted HBO spokesman Jeff Cusson, who said, "We are not in discussions and have no plans to work with Netflix." This is consistent with HBO's long-stated policy (rightly or not).

In a Hollywood Reporter article last year, Cusson was quoted as saying, ""HBO believes in content exclusivity, especially for high-value content. That's our rationale for not selling streaming rights to a competing subscription service."

In the past, Netflix has shelled out big bucks for desirable older shows such as when it paid Disney $45 million for Lost. So why wouldn't HBO want to make millions for its back catalog too? The idea that streaming services are somehow undermining its products is a misguided one.

In fact, Mark Cuban, the outspoken owner of the Dallas Mavericks basketball team who has been critical of Netflix over the years, was quoted in the previously mentioned Hollywood Reporter article last year as saying, "Netflix is absolutely a friend to producers and distributors--they are found money that is monetizing library assets as DVD sales fall." And Cuban should know. In addition to his sports holdings, he also owns content companies such as 2929 Entertainment, Landmark Theatres, HDTV and HDNet.

And Cuban is spot on. Netflix is not an enemy of content producers, quite the contrary. It provides a clear revenue stream for older content. It's not the concern of HBO or any other content owner what Netflix charges for the content after it gets the rights to distribute it, only that they got their fair market value in the content selling process.

What HBO is failing to understand here is that syndicating content on Netflix is no different than syndicating it on any other content syndication system. In the past, these types of shows were distributed on TNT or Nickelodeon, or a myriad of other channels. Old shows never die, they get redistributed. Look at the Law and Order franchise. You can find one of their shows on cable just about all the time.

And Netflix is just the modern equivalent of that, so why fight it? It doesn't water down your product. It gives people greater access to your content. For the content owner, it should always be about maximizing the value of their content, and for companies with desirable content like HBO, that means building the widest possible audience, whether that's on HBO or somewhere else.

For content producers, the largest upfront cost is content creation. Once that's in the books, the goal is to make as much money as possible off of that initial investment. Companies like Netflix give HBO the opportunity to continue to get a return on that investment. Why wouldn't they jump at that revenue stream? - Ron