Should HBO prioritize producing more high-budget original series or acquiring a larger library of existing content?

Introduction

The trade-off between producing more high-budget original series or acquiring a larger library of existing content is a critical decision for HBO's content strategy. This scenario involves balancing the potential for creating buzz-worthy, exclusive content against the appeal of a broad, diverse catalog. I'll analyze this trade-off by examining the business context, user impact, technical considerations, and resource allocation.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about HBO's current market position. Could you provide some insight into HBO's subscriber growth trends and how they compare to competitors?

Why it matters: Helps understand the urgency of the decision and competitive landscape. Expected answer: Moderate growth, facing increased competition from streaming giants. Impact on approach: Would influence the balance between immediate subscriber attraction vs. long-term retention strategies.

• Business Context: Based on HBO's revenue model, I assume subscription fees are the primary income source. How significant is advertising revenue, if any, in HBO's current business model?

Why it matters: Affects the potential value of a larger content library for ad-supported tiers. Expected answer: Minimal ad revenue, primarily subscription-based. Impact on approach: Would prioritize content that drives subscriptions over ad-friendly volume.

• User Impact: I'm curious about HBO's user segments. Can you share any insights on the split between users who primarily watch HBO originals versus those who value a broader content library?

Why it matters: Helps tailor the content strategy to user preferences. Expected answer: Mix of both, with a slight preference for originals. Impact on approach: Would inform the balance between investing in originals and acquiring content.

• Technical: Considering the streaming infrastructure, how scalable is HBO's current platform for handling a significantly larger content library?

Why it matters: Determines the feasibility of rapidly expanding the content offering. Expected answer: Moderately scalable, some upgrades needed for major expansion. Impact on approach: Would influence the timeline and resources needed for content acquisition.

• Resource: Regarding HBO's content budget, what's the current split between original production and content acquisition?

Why it matters: Provides context for the financial implications of shifting priorities. Expected answer: 60-40 split favoring original production. Impact on approach: Would help determine the magnitude of the strategic shift required.