Can You Guess What HBO Subscribers Spend Most of Their Time Watching?
The sixth season of HBO's hit series Game of Thrones will debut in April, but subscribers will spend more of their time watching something else.
Time Warner's premium cable networks, HBO and Cinemax, had a combined 49 million domestic subscribers at the end of last year.Some of those customers get the channels as part of a large,premium, paid-TV bundle. Others bought them as part of smaller, skinny bundles. A relative few subscribed to them directly over the Internet. But no matter how they subscribe, they all have their own reasons for doing so.
During Time Warner's earnings call last month, Home Box Office head Richard Plepler revealed a key fact about the viewing habits of HBO customers -- a fact that couldinfluencehow investors see the pay-TV space,and other businesses that compete with it, includingNetflix .
More than 72% of viewing hoursA subscription to HBO grants access to thousands of hours of content. And while the channel spends much of its marketing effort touting its high-profile, exclusive dramas, subscribers can also access a wealth of documentaries and comedies, as well as politically charged news shows and content aimed at fans ofprofessionalsports. There's even a growing cache ofchildren's programming.
But when you look at the numbers, most of HBO's customers aren't spending their time watching Game of Thrones or Girls. Rather, it's theatrical films that draws them in. Plepler explained in February:
In other words, for every 100 hours spent watching HBO, at least 72 of them are spent watching films. That's for HBO in all its forms, including its digital apps, HBO Go and HBO Now. And when it comes to viewers on its traditional cable channels, films make up an even greater percentage -- more than three-quarters.
Occasionally, HBO releases original films of its own (2012's Game Change and 2013's Behind the Candelabra were both widely praised), but the bulk of its catalog comes from Time Warner's film studio, Warner Bros. Currently, HBO is offering subscribers the ability to watch a number of notable Warner films, including American Sniper and Mad Max: Fury Road. It also has deals in place to offer films from 20th Century Fox and Universal.
Films may be just as important as original seriesWarner Bros. will release at least three major films this year, and all of them could eventually benefit its HBO business. Batman v Superman: Dawn of Justice will hit theaters later this week, followed by Suicide Squad in August. In November, Fantastic Beasts and Where to Find Them will transport viewers back to the magical world of Harry Potter. These films should make their way to HBO several months after their big screen premieres.
HBO's chief rival, Netflix, doesn't regularlydisclosesuch data, but Netflix content head Ted Sarandos told CNNMoney in 2014 that films accounted for only 30% of Netflix viewing hours. Thatwas a couple of years ago, and the situation may have changed somewhat, but it's still an interesting contrast between the two services. To its credit,Netflix offers many more television shows, across a wide range of genres.HBO offers fewer films than Netflix, but its catalog is arguably of higher quality.
However, that's starting to change. In 2012, Netflix inked a high-profile deal with Walt Disney that gave it the rights to stream Disney movies only a few months after they left theaters. That deal finally went into effect this year, which means that Zootopia, The Jungle Book, and Captain America: Civil Warcould be headed to Netflix in the future.
Netflix has also become a more aggressive buyer of exclusive films. Crouching Tiger, Hidden Dragon: Sword of Destiny hit the service inFebruary. And Netflix just spent upward of $90 million to acquire the rights toBright, an upcoming WillSmith movie, according to Deadline. Over time, films could play a much bigger role for Netflix in attracting and retaining subscribers.
For this reason, investors may wish to put more emphasis on film deals rather than original programming successes. Time Warner and Netflix regularly tout their Emmy nominations and exclusive series, but the streaming rights for blockbuster films may be just as important, if not more so.
The article Can You Guess What HBO Subscribers Spend Most of Their Time Watching? originally appeared on Fool.com.
Sam Mattera has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool recommends Time Warner. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright 1995 - 2016 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.