HBO's ex-chief says Blockbuster pushed it to invest in original content

Blockbuster's dominance in video rental is well documented, and it was the company's dominance that prompted Netflix to launch. The lesser-known fact is that, as Jeff Bewkes, former chairman of Time Warner and HBO's chief executive officer, states, it was also the catalyst for HBO's pivot toward original programming.

Home Box Office, or HBO as it is commonly referred to, was a company that centered its initial consumer proposition around bringing uncut theatrical movies into people's living rooms. When HBO debuted in 1972, it charged consumers a monthly fee for the privilege of being able to view full feature-length movies remotely without being interrupted by advertisements. HBO continued to add subscribers to its library throughout the 1980s even though other premium networks like Showtime, Encore, and Starz began offering similar items such as live boxing, comedy specials, and concerts to its lineup. HBO offered movies and a small selection of live boxing, comedy specials, and concerts at the time.

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In 1985, Blockbuster opened its first store in the United States. By the end of the 1980s, Blockbuster had undercut HBO's business proposition on a consistent basis. There has now been another way for consumers to watch uncut, commercial-free movies at home, and now they have the option to do it on demand as well. During a particular period of time, HBO broadcasts only one movie at a time. There are thousands of movies available at Blockbuster. Blockbuster took advantage of the booming rental market and offered movie studios its films six months ahead of HBO's window for the same.

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"By far, movies were our greatest selling point when it came to attracting customers," said former HBO and Time Warner CEO Jeff Bewkes, who spoke to Trade Algo for a digital documentary about HBO's history. "There are those of us at HBO who are sitting there saying to ourselves, 'We're screwed.' Our No. 1 reason why people want to subscribe to HBO is now being taken over by Blockbuster. In the end, what will we do? ”

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At the time, HBO was under the leadership of Michael Fuchs and decided that original programming was the answer. Fuchs placed two small bets with his limited funds on two original comedy series: Dream On, which premiered in 1990, and The Larry Sanders Show, which debuted in 1992, with only a few million dollars available to spend.

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"The cost for that pretty much depleted our budget," said David Bewkes, whose career at HBO started in 1979 and lasted from 1995 to 2002 when he ran the network. As a result, he later became the CEO of Time Warner, the parent company of HBO. "We used to call it the best hour on television. There was a time when I used to troll Michael [Fuchs] about it, and I would say, 'Yeah, the best hour of TV - actually it's almost an hour because we only had like 10 half-hours a year of Dream On and Larry Sanders.' We only had about 10 hours of serious programming in a year. There would be so much repetition that it would make us nauseated.”

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HBO had previously dabbled in original content, such as the launch of Jim Henson's "Fraggle Rock" in 1983, but "Dream On" and "Larry Sanders" were HBO's first two adult-oriented hits. During Bewkes' time as HBO's CEO, both of these shows ran for six seasons and helped launch HBO's golden age of original programming, with “Sex and the City,” “Oz” and “The Sopranos” all first airing in the late 1990s, while he was HBO's CEO.

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HBO was still faced with a dilemma even after "The Sopranos" debuted on HBO a few years ago, regarding how much to invest in its new original programming. There was always a shift in HBO's TV schedule, as it was dependent on how long the feature films would run. Network shows, on the other hand, usually aired at a set time during the week, but HBO didn't have that luxury. Furthermore, NBC had no consistent lead-in programs to boost the audience for new programming, as NBC was famously doing with the Thursday "Must See TV" during the 1990s which featured shows such as "Seinfeld," "Friends," "Mad About You," and "ER."

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With the help of technology, HBO has been able to compete with Blockbuster's "on demand" advantage and position itself as a network TV company that allows subscribers to access past episodes on demand. Originally launched in 2001, HBO On Demand offers subscribers the opportunity to catch up on previous seasons of their favorite shows, as well as build an audience for episodic series by watching them on demand.

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“With it, we were able to do long forms,” said Bewkes. "It gave us the ability to create completely different types of content. As a result, we can now make sequential series like 'Band of Brothers' or 'The Sopranos' - something that has a chronological order. In case you didn't catch the show last week, you could watch it this week if you missed it the previous week."

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In the end, Blockbuster ended up being the company that would not be able to recover from disruption. In 2010, the company declared bankruptcy as a result of financial difficulties. In 2018, AT&T acquired Time Warner, one of the world's largest media companies. AT&T renamed the unit to WarnerMedia and in a merger with Discovery Communications last year, the unit was divested and Warner Bros. Discovery was formed as a result.

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He acknowledged that had HBO's early investments in original programming not worked out, he isn't sure what HBO would have done in order to compete with Blockbuster.

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"It is a blessing that those shows were successful," Bewkes said. "If they hadn't hit, I'm not sure what the hell would've happened if they hadn't hit," he replied.