
HBO CEO: "...an internet-based model [for TV] is just a fad" - mschen
http://www.forbes.com/sites/erikkain/2012/05/09/hbo-has-only-itself-to-blame-for-record-game-of-thrones-piracy/
======
pwthornton
HBO is owned by Time Warner. That's why they say these crazy things and make
their content so hard for people to view. Time Warner wants to protect their
cable business at all costs.

If HBO were independent you wouldn't see these stupid comments. It's in HBO's
best interests to get their content seen by as many people as possible. That,
however, is not in the best interest of Time Warner.

HBO Go is largely a joke. Not only does it require a cable subscription, it
can't be used on the go. There is no offline caching of shows and to stream
shows it requires a pretty strong connection:
[http://interchangeproject.org/2012/05/10/why-is-hbo-go-
not-a...](http://interchangeproject.org/2012/05/10/why-is-hbo-go-not-a-to-go-
service/)

~~~
msg
When we were subscribing I was able to use HBO Go fine on 4G (TMobile, Seattle
area).

My bugaboo in this area is international football. Getting Premier League
games in the states is a real pain. I'm sure there's equally entrenched
interests there.

~~~
DanBC
F1 in the UK is split between BBC (free[1] terrestrial) and Sky Sports (non
free, satellite).

You can't just buy the sports, you have to buy a bunch of other stuff to get
the sports. It's very annoying.

[1] You need a tv licence if you use a TV as a TV, even if you never make use
of BBC content.

------
mattwdelong
I am 25 years old. I have never paid for cable and I have numerous shows that
I enjoy. I would GLADLY pay to watch some of my favourite shows, Game of
Thrones included. However, as I currently reside in Canada, I can't even watch
Hulu - Netflix Canada sucks. I have money; your show is not attainable through
monetary means and I will not purchase cable. What is a fella to do?

You do not like the answer.

~~~
mpat
I don't buy bread. I have sandwiches that I would like to make, but I can't
eat a whole loaf before it goes bad, so I don't buy it. I would gladly buy
half a loaf, but my grocery store doesn't sell half loaves. If they won't make
a half loaf to suit my needs and what I want to pay, I should just be able to
steal whole loaves?

~~~
cconroy
The analogy is ...

The grocery store will not sell half a loaf because they cannot figure out how
to keep them fresh enough to sell them. They don't try hard to sell half a
loaf and they basically tell the public to accept whole loaves as a fait
accompli.

A the growing demand for half loaves meets a innovative group of people who
found a way to deliver fresh half loaves to people. They sell them on the city
streets -- without a license -- near the grocery store. Customers are happy
again.

The grocery store finds out they have been losing revenues to the street
dealers and the engineering efforts they developed for delivery are based on
knowledge in the public domain. Instead of using this knowledge to serve their
customers the fresh half loaves they want, they try to stop the street dealers
from selling because they operate without a business license.

~~~
justncase80
Yes, this is a much better analogy.

------
tluyben2
As the article says and as a lot of people including me keep repeating: I
would pay practically ANY amount for movies & shows I want to see. I live in
the EU and you have to struggle to see shows like Game of Thrones legally
(basically, fly to the US or wait forever). That's not an option. Worldwide
(!) distribution at the same time (!) for an amount they make a profit on
would be fine with me and I know many others. It's not about money; it's about
that the world has changed; people have instant worldwide communication (via
Facebook for instance) about the unfolding of, for instance, this series, yet
the viewing is not worldwide. In the olden days, you didn't know about your
friends in the US and what they watched, so you didn't mind waiting a year for
a series to get on local tv. Hell, you probably didn't even know the series
existed until it aired. As long as this is not changed, people will keep
downloading as there is no alternative.

~~~
tluyben2
Oh, and why is there no feedback forum/something for these companies. In open
discussion they could see what their real audience wants instead of staring at
the falling numbers and drawing conclusions from suspected causalities!?

------
rglover
This would be so easy to fix if the network heads weren't so ignorant:

Make a Netflix style distribution system, allow users to subscribe a la carte
to a fixed number of channels on a tiered system (i.e. I can select up to 15
channels for $29.99 a month or 30 channels for $59.99 a month), and make it
all on demand. The infrastructure is there, the tech wouldn't be that hard to
set up, and it would make a BOATLOAD of money for both the networks and the
operators.

Honestly, it sounds like an ego game. They don't understand how these things
work so they go on the defensive as opposed to learning and improving their
business. Sad.

~~~
rprasad
_it would make a BOATLOAD of money for both the networks and the operators._

Only if by "boatload" you mean one of those little toy boats that floats in
the bathtub. Last year, NBC, the lowest rated broadcast channel, reported $4.2
billion in ad revenue (which represents a substantial decrease from the year
before). At the top end, CBS reported $6.3 billion in ad revenue. (Source:
[http://adage.com/article/mediaworks/2010-rebound-
broadcast-t...](http://adage.com/article/mediaworks/2010-rebound-broadcast-tv-
sees-2011-ad-revenue-fall/233345/.)) HBO clocked in at just over $1 billion
(estimated, final numbers pending) in revenue for 2011.
([http://www.hollywoodreporter.com/news/hbo-top-1-billion-
inte...](http://www.hollywoodreporter.com/news/hbo-top-1-billion-
international-176907)) In order for a la carte to generate the same amount of
revenue for a single broadcast channel, at say, $2/month, NBC alone would need
175 million subscribers, while HBO would need nearly 42 million subscribers
(or roughly 1/2 again its current subscriber base).

It's not an ego game, it's basic arithmetic. Internet streaming may be the
future, but it won't be the present until it gets a lot more expensive.

~~~
chii
"but it won't be the present until it gets a lot more expensive."

but the point is to make it cheaper. If this model can't be viable until its
just as expensive as the cable model, then whats the point?! Gawd damn.

------
felipemnoa
>>an internet-based model [for TV] is just a fad

You cannot help but laugh at such a comment. This is anecdotal evidence but
increasingly I've noticed people connecting their flat screen TV to their
computer and use that as their main source of media. And these are people that
are not technical in the least.

------
guelo
HBO does not need your money, they do really well selling their subscriptions.
HBO's business is based on charging $200/year to subscribers in exchange for
exclusive content. By offering a la carte shows at $9.99 or whatever they
would be breaking the exclusivity that they sell to their real customers. The
pirates' argument seems to be that HBO does not have the right to produce
exclusive content for their subscribers, as if access to all entertainment is
some fundamental right, it is not.

~~~
krakensden
Those are all good points, but it does seem silly that they refuse to sell
subscriptions to the uncabled youths for $250 a year.

~~~
untog
The cable companies would be extremely unhappy about that, and may drop them.

------
sp332
You have to realize, HBO's customers are not the subscribers. HBO's customers
are cable companies. The cable companies deal with the subscribers and just
keep track of how much to pay HBO every month. HBO doesn't even know who the
subscribers are! They don't have _any_ identification or billing information.
That's why they can't sell to customers directly.

~~~
CamperBob2
_They don't have any identification or billing information. That's why they
can't sell to customers directly._

(Shrug) All they have to do is ask. It's as if they don't _want_ to be able to
sell directly to their viewers.

Other publishing industries are frantic at the thought of middlemen like Apple
and Amazon owning subscriber relationships. Yet HBO and Showtime seem to
actively prefer it that way. I don't get it... don't they understand the risks
of putting all of their eggs in the cable provider's basket?

~~~
sp332
They have no customer support desks, no personally identifiable information,
no monstrous billing system. Turning from a B2B company to a B2C company is
not as easy as flipping a switch!

~~~
CamperBob2
Still doesn't explain why other publishers _want_ to be able to do this stuff
while TV studios do not.

------
mpat
Cable television requires a subscription with a cable company, telecom, or DTH
satellite operator.

Broadband internet requires a subscription with a cable company, telecom, or
DTH satellite operator.

An "internet-based model" has no impact on the supply chain. Cable companies,
telecoms, and DTH satellite providers still sit between the content providers
and the consumer.

------
masklinn
> Now, it’s important to note the reason for all this piracy: lack of access
> to the show for people who can’t afford, or choose not to purchase, a cable-
> TV subscription.

Which, for the purpose of watching Game of Thrones, includes everybody who
does not live in the US (and the UK for Game of Thrones, since it broadcasts
on Sky the day after).

That's roughly 6.6 billion people "without cable access" for the purpose of
watching GoT, even taking a third of that to account for people who have high-
speed internet access and understand spoken english reasonably well you're
still talking about a good 2 billion people who can see the series's hype
online and have no way to watch the show legally while it is hyped and they
can discuss it with other fans.

------
antidoh
An OTA broadcast-based model [for TV] was a bit stronger than a fad. What was
it that made it old-fashioned and bereft of really interesting content? Oh
yeah, HBO and its ilk.

It always amazes me when dictators who succeed via coup d'état think they'll
live forever.

------
psykotic
Does this remind you of someone else?

[http://www.telegraph.co.uk/technology/news/7874307/Prince-
th...](http://www.telegraph.co.uk/technology/news/7874307/Prince-the-
internets-completely-over.html)

~~~
etfb
"Guitar groups are on the way out, Mr. Epstein."

------
contextfree
Not necessarily defending this guy (who I know nothing about) or anything, but
I really hate it when somebody's paraphrase is put in quotation marks as if
it's a direct quote.

"HBO co-president Eric Kessler has said he thinks the move away from
traditional television to an internet-based model is just a fad that will pass
– a 'temporary phenomenon' tied to the down economy. "

The only actual quote here is 'temporary phenomenon', which could have all
kinds of contexts.

------
DiabloD3
I wish there was a way I could tell the CEO of HBO that I'm paying $16 to
Netflix every month for two streaming accounts and I canceled cable.

------
nazgulnarsil
"HBO Go requires a cable subscription"

If I was an HBO shareholder I'd laugh while I sold.

~~~
wvenable
HBO is bound by all kinds of license agreements to the cable providers and
that is their bread and butter. They simply cannot provide Internet purchasing
of their content. You don't really know what the CEO _actually_ believes
because _saying_ the Internet is a fad plays directly into his market (the
cable companies).

At this point in time, it might make more economic sense for HBO to ignore the
Internet. Although, I certainly hope they're planning for the future. And if
they are, it would still be foolish to let the cable companies know that.

~~~
felipemnoa
>>You don't really know what the CEO actually believes because saying the
Internet is a fad plays directly into his market (the cable companies).

I'm willing to bet that he actually believes this.

~~~
gibybo
I just can't imagine how he could. I can understand him saying this because it
makes a lot of business sense considering the company's position, but someone
so involved in content delivery cannot possibly believe internet delivery is
just a fad. They invested in HBO Go ahead of many of their rivals, so it seems
like they actually understand the future, they are just afraid to talk about
it now because the rest of the world isn't ready.

------
dm8
It wasn't a while ago someone from DEC made bone headed prediction -

"There is no reason anyone would want a computer in their home."

I don't understand why media companies don't get it that future is Internet.
iTunes and Netflix are shining examples of that. What more evidence do they
want?

Edit: Added Netflix reference

~~~
DiabloD3
I thought that was IBM, not DEC?

~~~
CrownStem
That was said by Ken Olsen, CEO of DEC, in 1977- At a meeting of the World
Future Society, of all places. Granted, he later said that he was referring to
large computers common at that time.

~~~
Fuzzwah
My little bit of snopes'ing pulled up an interesting ass covering that Olsen
made in reference to this quote, which as time goes on still sounds equally as
bad:

> I did make a number of statements and still make statements that people
> don't understand about computers, or delight in misquoting. A long time ago
> when the common knowledge was that PCs would run our lives in every detail,
> I said that if you stole something from the refrigerator at night you didn't
> want to enter this into the computer so that it would . . . mess up the
> computer plans for coming meals.

------
kamaal
I think certain MBA types totally fail to predict disruptive business trends
and that's because they never understand full implications of any thing. This
is a problem with anybody who looks things only from a abstract sense.

Like many have mentioned in this thread, People said similar things about
computers in the past.

This is why its so important to understand what you are dealing with, every
aspect of your business sometime you need to get down to the grass root levels
to understand.

Merely 'I can get this job done by hiring techies' doesn't always help all the
time.

------
badclient
Is there an upside to making a statement like this for a guy in his position?
I am trying to think because the potential downside(becoming the laughing
stock) in future seems huge.

------
justncase80
It seems monopolistic and anti-competitive for a content distribution company
to also own a content creation company. The government should get in there and
break that shit up. I think HBO would find it quite lucrative to be able to
directly sell their content to their customers. When you find yourself in a
situation where it's easier to download a show off of bittorrent illegally
than it is to get it legitimately from the content creator directly, something
is messed up.

------
dataisfun
This is all I have to say: <http://www.rinkworks.com/said/predictions.shtml>

------
JeremyBanks
HN headline is wrong. The quote is from co-president Eric Kessler, not CEO
Bill Nelson. The CEO isn't even mentioned in this article.

------
zitterbewegung
Hrm, game of thrones also is one of the most highly rated shows on Cable.
[http://articles.nydailynews.com/2012-04-17/news/31357061_1_t...](http://articles.nydailynews.com/2012-04-17/news/31357061_1_thrones-
nielsen-ratings-data-viewers) .

~~~
hack_edu
... because they have drastically limited its availability for direct
downloads and pursue pirates like the coming winter.

~~~
gte910h
Or perhaps it's a really good show? Its on tons of "watch for free" sites

------
robomartin
Someone should make a website with famous declarations by high-ups in various
industries. It'd be a neat historical reference.

For example: "There is no reason for any individual to have a computer at
home" (Ken Olsen, Digital Equipment Corporation).

------
pwthornton
This is unrelated, but this reminds me of when my wife worked at a newspaper
and her boss said that "The Internet is just a fad."

That thinking has worked out real well for newspapers.

------
littletables
The response I got on this article today was, "I've talked to HBO execs at NAB
and IBC. They're simultaneously clueless and shackled to Time Warner."

How do you solve that?

------
UK-AL
Of course he would say that. The traditional industry is trying to stop legit
Internet viewing.

Netflix or some other company needs to become strong and break them.

------
dataisfun
This is all I have to say (full version):

I think there is a world market for maybe five computers." -- Thomas Watson,
chairman of IBM, 1943. "Where a calculator on the ENIAC is equipped with
18,000 vacuum tubes and weighs 30 tons, computers in the future may have only
1,000 vacuum tubes and weigh only 1.5 tons." -- Popular Mechanics, 1949 "I
have traveled the length and breadth of this country and talked with the best
people, and I can assure you that data processing is a fad that won't last out
the year." -- The editor in charge of business books for Prentice Hall, 1957.
"But what...is it good for?" -- Engineer at the Advanced Computing Systems
Division of IBM, 1968, commenting on the microchip. "There is no reason anyone
would want a computer in their home." -- Ken Olson, president, chairman and
founder of Digital Equipment Corp., 1977. "640K ought to be enough for
anybody." -- Attributed to Bill Gates, 1981, but believed to be an urban
legend. "This 'telephone' has too many shortcomings to be seriously considered
as a means of communication. The device is inherently of no value to us." --
Western Union internal memo, 1876. "The Americans have need of the telephone,
but we do not. We have plenty of messenger boys." -- Sir William Preece, chief
engineer of the British Post Office, 1876. "The wireless music box has no
imaginable commercial value. Who would pay for a message sent to nobody in
particular?" -- David Sarnoff's associates in response to his urgings for
investment in the radio in the 1920s. "While theoretically and technically
television may be feasible, commercially and financially it is an
impossibility." -- Lee DeForest, inventor. "The concept is interesting and
well-formed, but in order to earn better than a 'C', the idea must be
feasible." -- A Yale University management professor in response to Fred
Smith's paper proposing reliable overnight delivery service. (Smith went on to
found Federal Express Corp.) "Who the hell wants to hear actors talk?" -- H.
M. Warner, Warner Brothers, 1927. "I'm just glad it'll be Clark Gable who's
falling on his face and not Gary Cooper." -- Gary Cooper on his decision not
to take the leading role in "Gone With the Wind." "A cookie store is a bad
idea. Besides, the market research reports say America likes crispy cookies,
not soft and chewy cookies like you make." -- Response to Debbi Fields' idea
of starting Mrs. Fields' Cookies. "We don't like their sound, and guitar music
is on the way out." -- Decca Recording Co. rejecting the Beatles, 1962. "Radio
has no future. Heavier-than-air flying machines are impossible. X-rays will
prove to be a hoax." -- William Thomson, Lord Kelvin, British scientist, 1899.
"So we went to Atari and said, 'Hey, we've got this amazing thing, even built
with some of your parts, and what do you think about funding us? Or we'll give
it to you. We just want to do it. Pay our salary, we'll come work for you.'
And they said, 'No.' So then we went to Hewlett-Packard, and they said, 'Hey,
we don't need you. You haven't got through college yet.'" -- Apple Computer
Inc. founder Steve Jobs on attempts to get Atari and HP interested in his and
Steve Wozniak's personal computer. "If I had thought about it, I wouldn't have
done the experiment. The literature was full of examples that said you can't
do this." -- Spencer Silver on the work that led to the unique adhesives for
3-M "Post-It" Notepads. "It will be years -- not in my time -- before a woman
will become Prime Minister." -- Margaret Thatcher, 1974.

~~~
Lockyy
"To Robert Fulton What, sir, would you make a ship sail against the wind and
currents by lighting a bonfire under her deck I pray you excuse me. I have no
time to listen to such nonsense." - Napoleon

------
alantrrs
Oh the establishment. They don't want to go out of their same ways of doing
business and evolve like the rest of the people.

------
fleitz
In the game of piracy you seed or you die.

------
aspensmonster
...and guitar music is on the way out.

