HBO has extended its movie output deal with Lionsgate’s Summit Entertainment through 2022.
HBO chief Richard Plepler announced the deal, which adds four years to the previous pact, on Wednesday during his appearance at the Morgan Stanley Technology, Media and Telecom conference in San Francisco. Plepler also confirmed during his Q&A that HBO will launch stand-alone streaming services in Brazil and Argentina later this year.
Plepler was pressed on the performance of the U.S. streaming service HBO Now, which opened for business last April. The disclosure last month that HBO Now has signed up about 800,000 subscribers was seen as underwhelming by many analysts. Plepler emphasized that HBO has been developing programming targeted to the demo that is most likely to seek out a streaming service — citing its recent content pacts with Jon Stewart, Bill Simmons and nightly newscast plan with Vice — and when those shows come to fruition later this year the marketing push for HBO Now will increase.
“When that comes on this summer and into the year we will start marketing accordingly, using a lot of that content to attack what we think is a real opportunity in the digital space,” Plepler said. “We have not turbo-charged the direct marketing as much as we will in the coming months.”
Plepler noted that Stewart, the former “Daily Show” anchor, came to HBO specifically because of the opportunity to work in new formats through a streaming environment with the HBO patina.
“Jon’s pitch was not to do a network show. Jon’s pitch was to do an HBO Now show,” Plepler said. “Spike Lee just came to see me about an idea he wouldn’t even have had if not for HBO Now.”
Of HBO Now subscribers to date, less than 1% previously subscribed to HBO through traditional pay TV providers. That reinforces HBO’s view that the stand-alone service will not cannibalize HBO’s existing customer base but will be additive over the long term. He also noted that HBO Now is still expanding its distribution base, with Xbox and PlayStation Vue coming on line later in the year.
“We’re off to a very, very good start,” Plepler asserted. “We have a long way to go. We’re just getting started.”
Plepler reiterated that HBO believes there are about 12 million to 15 million “persuadable homes” that are the target market for HBO Now. That’s the pitch he’s making to traditional MVPDs and digital partners. “If we’re even half right about that, it’s $100 million out there for both of us. Why leave that on the table?” he said.
Plepler was also questioned about HBO and its position within Time Warner. There’s been much speculation that Time Warner is a takeover target, and some investors have called for an HBO spin-off of the parent company to boost its market valuation. Plepler maintained that HBO was better off staying under the Time Warner umbrella with Turner Broadcasting and Warner Bros. For one thing, he said, distribution clout is enhanced at home and abroad by the muscle that the three units bring in different arenas.
“This company together is simply much stronger than obviously we would be alone,” Plepler said.