Premium pay channel HBO will continue to emphasize its original programming strategy, and plans to increase by 50% the number of hours of original programming that it produces a year, its chief executive said.
HBO will generate about 600 hours of original programming this year for its domestic channels and global outlets, CEO Jeff Bewkes said Tuesday at the Deutsche Bank Media, Internet and Telecom Conference for investors in Palm Beach, Fla.
"That is very distinctive content," Bewkes said.
HBO spends about $2 billion a year on programming, with a little more than $1 billion of that steered to the production of original series, said the the Time Warner chief, who rose through the ranks at HBO before taking on a larger corporate role.
That exclusive programming plays well on the traditional linear TV channel as well as the company's new streaming service, HBO Now. The company hopes that HBO's original programming strategy will be an important selling point as consumers weigh the benefits of various streaming services, including Hulu, Amazon.com and Netflix.
HBO has struck deals for original programming from such brand names as Sesame Street, Jon Stewart, Bill Simmons and Vice News. Those headliners provide another marketing hook for the HBO Now service.
HBO last summer collared the rights to the next five seasons of "Sesame Street" for its various outlets. The episodes will run first on HBO before airing on PBS, the longtime home of the popular children's series.
Analysts have wondered whether HBO should lower its $14.99-a-month subscription fee for the so-called over-the-top streaming service to entice new customers who are used to paying around $10 a month for Netflix.
Bewkes didn't rule that out, but he reminded investors that HBO has a different strategy from its streaming competitors.
"We are not trying to pursue the lower-priced strategy," he said.
Other services largely rely on off-network TV reruns and movies to provide value to their offerings, in addition to some original content. In some cases, original shows make up a small percentage of the total catalog offered to subscribers.
"We don't want to take that HBO brand and original content and move it to a bulk syndicated offering," Bewkes said.
In addition, HBO's ownership of original content makes it easier for the company to expand its service in foreign markets. In some cases, Netflix lacks international rights to programming that is popular on its service in the U.S.
Bewkes noted that analysts should not overlook the value of the Hollywood movies that play on HBO as part of the value equation. HBO has rights to recently released films from several major studios, including Warner Bros., 20th Century Fox and Universal Pictures.
HBO Now, the streaming product, has nearly 1 million subscribers in the U.S. Some analysts were disappointed that HBO, which launched in April, hasn't gained more traction in the U.S.
Bewkes urged patience.
"We have been trying to evolve this in a sensible way," he said, adding that the service was exclusive to Apple Inc. products for several months. The product is launching soon on Microsoft Xbox and Sony's PlayStation, he said.
HBO Now is just one of several ways to get HBO, he said. But, in a twist, the company signed up more new customers last year the old fashioned way: through a pay-TV operator.
"Viewers paying for HBO was actually accelerated," Bewkes said, adding that HBO and its sister channel Cinemax added 2.7 million subscribers. "The last two years have been the highest growth in HBO subscribers in 30 years."