Earlier this month Time Warner Inc. (NYSE: TWX) reported its fourth quarter and full-year 2016 financials. In addition to full-year revenues of $29.3 billion, a 4 percent increase over the prior year, HBO Now, the company’s over-the-top TV subscription service, has surpassed the 2 million subscriber mark, tripling subscriptions in 2016 compared to 2015, reports The Motley Fool.
HBO revenue, which includes HBO Now subscription revenue, was $5.9 million for 2016, representing a 5 percent increase over 2015 and about 20 percent of total Time Warner Inc. revenue.
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Time Warner Inc. Chairman and CEO Jeff Bewkes commented on HBO and HBO Now’s success in the company’s earnings call:
“HBO had another great year while making investments for an even stronger original programming line-up. Once again, 2016 brought more Prime Time Emmy Awards to HBO than any other network, and that’s for the fifteenth straight year. Game of Thrones‘ sixth season hit record viewership of 26 million people per episode,” Bewkes said. “We also had the biggest launch of a new series in HBO history with Westworld. It is produced by Warner Bros., and it surpassed even the Game of Thrones‘ first season.”
“Even with the explosion of new outlets and choices in this golden age of video, HBO remains singular in its ability to attract artists who push the boundaries of what’s creatively possible, and that’s the case whether it’s on an epic scale of a show like Westworld or on a human scale with a show like Girls which begins its fifth and final season this weekend,” Bewkes added.
“HBO has also been blazing the trail on connecting with consumers through its streaming product on Microsoft’s Xbox, Samsung smart TVs, Sony PlayStation and Amazon Prime Channels in 2016. In total, HBO recently surpassed 2 million domestic over-the-top subscribers, so we’re really pleased with the progress, and HBO is just as focused on reaching consumers abroad with over-the-top launches in Spain, Brazil and Argentina in 2016,” said Bewkes.
This record growth for HBO Now will be important going forward, especially as more cable subscribers become cord cutters. The advantage, says The Motley Fool, is that with OTT subscriptions, subscribers pay HBO directly. There is no middle man, so HBO sees 100 percent of the income. Whereas, with a cable subscription to HBO, the cable company and/or its affiliates will take about half the revenue before it goes to HBO. As HBO Now revenue grows, Time Warner is hedging its bets against the future with a growing, long-term source of recurring revenue.
In addition to HBO Now, last year Turner Classic Movies launched FilmStruck, another over-the-top TV service under the Time Warner umbrella. This service is focused on feature films including more than 1,000 independent, art-house and international movies.
Coupled with HBO Now, Time Warner has helped insulate itself from the possible loss of cable subscribers over time. With its award-winning, original programming, and a wide array of entertainment choices available to both cable subscribers and cord cutters, Time Warner is positioned to ride out the market as it stabilizes.