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How CBS, HBO and NBC Are Braving the Digital Waters

CBS is pulling the Enterprise out of storage. HBO landed one of the biggest free agents in showbiz. And NBCUniversal is trying to corner the market on hipster comedians.

As traditional TV networks dive into the SVOD channels business, they’re feeling competitive pressure to make their streaming services something more than merely a new way to view their existing linear programming.

CBS and HBO are prepared to step up consumer marketing efforts next year for their broadband-only CBS All Access and HBO Now. So it is no surprise that both are loading on extra incentives to persuade viewers to open their wallets.

“Remember, Netflix itself, Hulu and Amazon also learned the hard way that they can’t just be catalog content from third parties,” said Joel Espelien, senior analyst for Dallas-based consulting firm TDG Research. “If an SVOD service doesn’t have the exclusive ‘wow’ show to draw subscribers, they’re going to have big problems.”

CBS is launching the next-next generation “Star Trek” series in 2017; the show will air exclusively on All Access after the first episode launches on the CBS mothership.

HBO has cut a rich production deal with Jon Stewart that calls for “The Daily Show” alum to produce topical short-form content for HBO Now — a selling point that seems tailor-made for a digital ad campaign.

NBCUniversal, meanwhile, surprised the biz with the high volume of original series it has on tap for its Seeso comedy channel, slated to launch in January. The channel will not only be home to “Saturday Night Live,” “The Tonight Show Starring Jimmy Fallon” and other NBC comedy fare, but also a slew of original series and specials featuring millennial-friendly talent.

“TV is not a mass-market, one-size-fits-all medium anymore.”
Analyst Joel Espelien

To reinforce the sense of a free-for-all these days in the programming arena, CBS’ and HBO’s moves came the same week that digital darling Vice Media announced its plan to launch a 24/7 cable channel with A+E Networks. As linear heavyweights look to remain vital with viewers who favor digital platforms, an Internet video behemoth is moving into the old-fashioned TV game.

What gives? The motivation behind all of the upheaval in TV content distribution boils down to the industry adjusting to the new world order of viewer choice, observers say. CBS, HBO, NBCU and their ilk can’t afford to be off the radar with a generation that is clearly migrating to on-demand and mobile platforms. Vice Media has plenty of eyeballs online, but it hungers for TV’s much bigger pool of advertising dollars — which still dwarf digital ad spending in the U.S. by a factor of 10, despite the market’s much talked-about challenges.

“TV is not a mass-market, one-size-fits-all medium anymore,” Espelien observed. “In any consumer market right now there is no turning the ratchet away from more consumer choice.”

Neither CBS nor HBO has disclosed subscriber figures for their stand-alone services. Some in the industry and on Wall Street have speculated that the new programming pushes are signs that initial sales have been slower than they’d hoped.

The progress of CBS All Access and its sibling Showtime broadband service were the dominant theme of questions that CBS chief Leslie Moonves fielded from Wall Streeters during the network’s third-quarter earnings call on Nov. 3. HBO Now was also a big focus for analysts during Time Warner’s Nov. 4 earnings call. The businesses are tiny now in the scheme of things for both congloms, but they are seen as important bellwethers for the future.

Insiders dispute the suggestion that subscriber uptake has been disappointing, especially as neither has yet to unleash a significant national marketing blitz.

Moonves noted that September was the strongest month yet for CBS All Access sign-ups since the service launched in October 2014. CBS chief operating officer Joe Ianniello said that CBS All Access and Showtime’s broadband channel (which bowed in July) would be contributors to the Eye’s projected operating income growth in 2016.

Original programming was part of the game plan for CBS All Access from the start. “Star Trek” was a natural choice because the worldwide fan base for the enduring franchise virtually assures strong international sales. What’s more, CBS has been approached by more than one SVOD rival interested in reviving a “Star Trek” series. That told network execs it was a no-brainer to steer the show to CBS All Access, which is also home to the previous five “Trek” TV series, starting with the original 1966-69 edition.

The Nov. 2 announcement of the new “Trek” mission was strategically timed to set the table for the show’s consumer marketing campaign. That will piggyback on next year’s planned “Trek” 50th anniversary hoopla leading into the January 2017 series launch.

HBO, meanwhile, has been loading up on deals with marquee players, such as sports and culture commentator Bill Simmons and children’s favorite “Sesame Street” — kids programming in particular has proven to be a source of stickiness for SVOD players.

“We love the programming that we’re adding,” HBO chief Richard Plepler told investors during the earnings call. “We’re going to make the necessary investments not only in content, but in marketing.”

With all these networks taking aim at new screens, the only certainty is that the fight for viewers’ time and money is only just beginning.

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