HBO Eggs on Netflix

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hbo NETFLIXOn a frigid winter Friday in Manhattan’s MediaGulch, HBO CEO Richard Plepler glides through the doors of a power-lunch spot called the Lambs Club. Plepler, the kind of natty dresser who believes that real men would never be caught dead without a pocket square, sports a tweed blazer over a baby blue cashmere sweater that perfectly accents his eyes. He floats across the marble floor, slips into his regular booth in the corner—a spacious, red leather cove—and slings one arm across the top of the banquette.

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“Ray, anything for us to know?” Plepler booms cheerfully to a tuxedoed waiter who has materialized at our table. Before the slightly bowed man is done rattling off the specials, Plepler orders what he always orders: chicken paillard. A number of media dignitaries and city elites stop by to pay their respects. One society matron reminds Plepler of a dinner on the books with her Ivy League son to talk to him about “the real world.” When our meal is over, there is no check drop; we simply walk out of the restaurant. 

Nothing about the Lambs Club resembles the real world in 2015. And Plepler, with the chiseled features of a prizefighter and a ruddy, year-round tan, gives off the air of someone living in a simpler mediascape than the one he actually inhabits, the one where his elegant BMW of a company is being dinged left and right by scrappier, younger media vehicles like Amazon, Hulu, Netflix, and a slew of new online streaming services.

Netflix is the peskiest of these, the only one that could, in the opinion of some pundits, knock HBO off track. Plepler became CEO on January 1, 2013, and later that very month, Netflix’s chief content officer, Ted Sarandos, declared, “The goal is to become HBO faster than HBO can become us.” Since then, Netflix has launched original series such as House of Cards and Orange Is the New Black, acquired the right to air five new Marvel series and Chelsea Handler’s next project, grown from 33 million to 57.4 million subscribers, and increased revenue from $3.6 billion to $5.5 billion, while boosting its stock price almost 400%. “Two to three years ago, the average user was watching almost 60 minutes of Netflix a day. Today, it’s nearly two hours,” says Liam Boluk, a media strategy consultant at Redef. “Netflix is bigger than every single cable and premium-cable network in the U.S. No matter how well programmed, powerful, or profitable HBO is today, you can’t look at that scale and might and not feel the need to act soon.”

HBO has not exactly been standing still over the past two years, adding more subscribers in 2014 than in any of its previous 30 years; its creative hot streak has continued with True Detective, Silicon Valley, Looking, and more; and it’s far more profitable than Netflix ($1.8 billion versus $403 million in 2014). Yet this good fortune hasn’t prevented Plepler from recognizing the potency of the threat that Netflix and its ilk present.

Plepler’s response gets unveiled 17 days after our lunch. Called HBO Now, it is a stand-alone version of HBO Go, an app that gives access to just about every episode of every HBO series, as well as tons of movies, documentaries, and sports. Rather than merely being a bonus for people who subscribe to HBO through an existing cable provider (usually paying something like $15 a month), HBO Now will not require a cable subscription. It will be available at launch to anyone with an Apple device.

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