HBO's Online Shift: A Game Changer?
Case Code: BSTR482
Case Length: 17 Pages
Pub Date: --
Teaching Note: Available
Organization: Home Box Office, Inc.
Industry: Cable Industry
Themes: Business Strategy
Abstract Case Intro 1 Case Intro 2 Excerpts
In 1972, Time Inc. formed a subsidiary called HBO to offer a cable television service that was broadcast through microwave links. HBO's broadcast primarily included the latest movies, select sports events, and TV specials. From its early days, HBO was offered at a premium. Cable operators charged viewers US$ 6.50 for the channel. Of this, US$ 3.50 went to HBO. In 1975, HBO began delivering its service through satellite, thereby becoming the first American TV network to have national reach.
Considering that the cable industry was at a nascent stage, HBO grew slowly in its early years and made its first profit only in 1977. The company began facing competitive pressure with the launch of 'Showtime', another TV channel with similar programming, in 1976. Over the years, HBO set about improving its programming and created one of the first TV forums for comedians to showcase their talent. It also financed films in exchange for exclusive pay-TV rights after release. This was a risky move, considering the fact there was no way of gauging the eventual success/ failure of the movies whose rights it was purchasing. However, HBO managed to capitalize on the move, thereby increasing the channel's popularity....
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