Home > Uncategorized > A Look at How Media Marketing Decisions are Made: Through the Lens of HBO

A Look at How Media Marketing Decisions are Made: Through the Lens of HBO

HBO (Home Box Office) is a subsidiary of Time Warner Inc., which is the world’s largest media conglomerate.  In addition to airing theatrical motion pictures, HBO has also received critical acclaim for its original television series, comedy specials, and documentary series, such as the boxing series, 24/7.

While HBO has no published official mission statement its website cites its corporate information as: “America’s most successful premium television company, Home Box Office offers two 24-hour pay-TV services-HBO and Cinemax- to approximately 41 million U.S. subscribers.” HBO has been the top premium cable network for most of its existence, and its diversified offerings are one of the reasons for this.

My choice of HBO comes from my personal interests in their programming as well as my professional interest in entertainment production.  As a writer and avid fan of television comedy and gritty drama, some of my favorite television shows are HBO originals: Curb Your Enthusiasm, The Wire, The Sopranos, and Deadwood.  

The first decision that I will analyze is HBO changing its slogan from “This is HBO” to “It’s HBO.”  While such a decision may seem somewhat minute and  mere semantics to many, companies put a lot of stock in such slogans due to the fact that they are used in countless advertising venues and therefore receive a large amount of exposure to both subscribers and potential subscribers.  For this decision, it would seem as if HBO would have sought out psychological information from focus groups and test audiences, and researched ethnographic and demographic information to see what the difference in perception and resonation is between the two slogans.  In terms of primary data, the reactions to the new slogan through focus groups and such would be a good example of a strategy that HBO probably employed.  As for secondary data, past research and empirical data dealing with regression analysis and customer input to slogans was likely used.  Also, since HBO has changed their slogan other times in the past, it would be useful to examine how data correlating with those decisions impacted different figures.  The main sources of information would have been focus groups, questionnaires, and past statistics, and the research would have been a strong combination of quantitative data dealing with numbers dealing with changes in viewership related to slogans, and qualitative data attained from focus groups which were likely used to gauge participants’ opinions and reactions.  This could have also been a unique situation in which experimental research may have been useful, coupled with regression analysis, in observing responses to the slogans.

As far as forecasting for this particular decision, I feel that the majority of it would have been on forecasting revenues for the year, and whether they would be large enough to make the venture of a slogan change worthwhile.  Also, time-series analysis could have been used to track what times of year viewership is the highest, being that such a time would likely be the a prime opportunity to introduce a new slogan to try to resonate best with audiences.

As far as risk with this decision, it seems to be that there is a bit of financial risk involved, and this deals with whether or not the costs of the change of the slogan would outweigh the benefits.  For instance, the menu costs and brand alteration involved with a slogan change would require somewhat significant marketing resources: the risk being that the added revenue received from the slogan change would not exceed the costs it took to change it.  Furthermore, there is a bit of risk of altering the perception of the brand image, as consumers could become perplexed by the change and curious as to what the cause was, perhaps suspecting there are internal issues that is pressing the company to make desperate marketing decisions.  In totality, however, there isn’t a significant amount of risk in this decision compared to other large ones that large companies will make.

The second decision that was made by HBO in the past two years was the launching of the HBO Go web site, which is an program featuring over 600 hours (at the time of release) of downloadable streaming movies, original programs, comedy and documentary specials, sports, and adult entertainment.  There is a dearth of information and research to deal with in this situation, due to the explosion of interest in streaming video, which is often viewed through the medium of high-end video game consoles such as X-Box 360 and Playstation 3.  This pattern of market behavior is no more evident than in the dramatic increase in Netflix customers.  The type of information that executives needed to support this decision would be focused on both primary and secondary data.  The primary data would deal with how the specific proposed program of HBO Go would be demanded by certain groups.  The secondary data would deal with the figures surrounding the streaming video market and how accessible it is to HBO customers and potential customers.  In order to research for this decision, focus groups would be used to test HBO Go and find out what receptions and reactions are toward its features and format.  This research would be extremely comprehensive in both the quantitative and qualitative aspects.  Because of the nature of the program and the growing consumer demand for streaming video formats, qualitative research and feedback from focus groups would be crucial to receiving important primary data to explain how HBO Go will be received, and therefore, the revenues it will produce for the company.  The quantitative research for this decision would be responsible for really digging deep into the numbers in the market, and using figures responses from current customers to gauge how much interest there would be in the program.  I would think that, given HBO’s large brand identity and considerable financial resources, an immense amount of research was conducted through focus groups, quantitative studies, and other types of questionnaires, interviews and open-ended responses.

This would be a decision where marketing information systems and forecasting methods would be very crucial, because the extent of the demand for HBO Go is very important in determining the effectiveness, as well as ultimate decision whether or not to go through with the new web site.  A large portion of the forecasting would involve the regular figures for HBO membership demand and potential, because the subscription to HBO is a prerequisite to HBO Go access.  Therefore, numerous forecasting techniques were likely performed to determine how much revenue is anticipated normally, and from there, how many of those customers would subsequently make use of HBO Go.  Also, due to the emerging nature of streaming video, market potential forecasting would have been a useful tool in finding ways to attract customers to HBO through HBO Go.  Obviously, the forecasting that was done by HBO supported the decision to green-light the project based off of the probability of increasing revenues and expanding into new markets and gaining new customers.

When evaluating risk for this decision, there was a considerable amount of financial risk that is at stake for HBO with HBO Go.  First, the most important decision is whether or not to set the project into motion.  As stated in the assignment, sometimes the biggest decisions are the ones that aren’t made.  If research and data had shown that the web site may have been unprofitable and not well received, depending on the figures HBO could have decided to scrap the idea.  There is a lot of financial risk in dedicating all of the resources: employee, marketing, research, development, contracts with web and cable providers, etc. that go with launching such a development.  If it flops and is unsuccessful, and the firm suffers low revenues from it that fail to exceed the costs, it has lost money in the overall decision.  It may be forced to pull the plug on it altogether, which opens to door to the possibility of the brand’s reputation taking a public hit.  However, the research, studies, and forecasting techniques that were mentioned above usually carry reliable predictions when conducted properly, and given the growing public demand for streaming video services, they decided that it was time to launch HBO Go.

The final decision that I will analyze is HBO’s renewal of their original series, The Newsroom, for a second season.  The highly anticipated series is a re-make of the acclaimed Canadian series of the same name, although its content and focus is considerably different.  Throughout its first season, The Newsroom received mixed reviews, and also attracted criticism for some of its depictions of events portrayed throughout the season.  While viewership, according to Nielsen Ratings has been solid, it has not been spectacular.  Renewal of this series was a very large and important decision for HBO, and I can imagine it required a significant amount of research and consideration.

There is a lot of information that goes into determining whether or not a television series is renewed for another season.  The decision must consider costs such as production, marketing, licensing, and legal/contract, and what type of fan base exists (or is potential), and the potential of other broadcasts that could fill the existing time slots.  A lot of primary data would have to be acquired from viewers, determining what their reception of the show was and openness to remain loyal to the series if it continues.  A dearth of secondary data would also be used in order to determine viewership loyalty patterns from season to season and historical trends of similar shows, as well as the overriding social atmosphere, and whether it is conducive to the show’s content and aura.  Obviously, HBO would have intricately examined Nielsen statistics and other viewing polls, as well as the increase in subscribers.  Other sources include time-series analysis (which would help to examine cyclical and seasonal trends) and expert opinions: sociology, psychology, and other cultural experts are often solicited by television and film producers to help determine how a show fits in with the society at large.

Traditional focus groups, questionnaires, and abstract elaborations by viewers were also like researched by HBO to gain perspective from the viewers.  Qualitative research is important for television series because it’s important to know what the particular opinions about the show’s nuances and specifics are, in order to improve them if the show continues, or make subsequent changes to the cast and/or writing and production staff.  Quantitative research is also important, considering that television shows’ main purpose is to attract viewers, or in the case of those that belong to premium cable networks such as HBO, increase subscribers.  What is also an important consideration is the research and testing going into other programs that HBO is producing and considering for future air time.  All of the aforementioned techniques are used for shows that are being made, but have yet to receive a contract for air time.  HBO experiments with numerous specials and ideas, which they are constantly working on and considering the possibility of a spin-off into or creation of a future series.  Because The Newsroom occupies a prime-time slot, it is important for HBO to consider replacing it with another series or program if they think it will attract more viewers.

Forecasting is important in this decision, both in forecasting projected viewers as well as revenue.  Because production costs for large television series can be so high, they are large investments that are always more feasible to accommodate when incoming revenues are high.  A strong forecast would perhaps give HBO more freedom in making the decision on a venture like The Newsroom, which has a considerably high level of potential to maintain and attract new viewers, but also carries the risk of never quite finding a strong mainstream following.  A company like HBO is likely always performing one type of forecasting or another to help determine current and future creative project’s level of interest and future potential, and a decision to renew a series would be no different.  This would be a perfect case in which data mining techniques and message board monitoring would serve effective, as it would provide producers with input and reactions regarding the show in live time, allowing the company to evaluate how the show is being received at the ground level.

Finally, in assessing risk in this decision, it is important to consider a few financial and market factors.  First, the financial ramifications are obvious: if the show fails to perform in the second season, many costs will be sunken in the investment, and the network will also incur potential opportunity costs of other programs that could have been invested in more heavily.  Second, it is important to analyze the market for shows of the genre and demand for premium cable subscriptions, as a fall in either could result in plummeting interest in The Newsroom.  There are a multitude of financial risks being absorbed when it comes to gauging the public’s interest, especially since at the time of this decision, production on the second season had not began, therefore HBO had very little idea of determining its creative course or changes to the show’s structure that are the crux of determining viewer’s demand.  As we know, only time will tell whether this particular decision was prudent.

This exercise shed a great deal of light into both the intricacies of the entertainment industry and the decisions it faces as well as the overall transcendent qualities that exist in marketing.  Information systems, research processes, forecasting techniques and models, and risk assessment formulas are all important considerations that permeate any sector or industry.  Examining specific, real world decisions that HBO has made by combining empirical research and speculative simulation has provided me with great insight and critical thinking that will help the way I view these decisions in the future, both those made by myself as well as companies that shape the world around us.

Advertisements
Categories: Uncategorized
  1. No comments yet.
  1. No trackbacks yet.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: