1 00:00:03,400 --> 00:00:06,440 Speaker 1: Get in touch with technology with tech Stuff from how 2 00:00:06,480 --> 00:00:13,440 Speaker 1: Stuff Works dot com. Say that everyone, and welcome to 3 00:00:13,520 --> 00:00:17,000 Speaker 1: tex Stuff. I'm Jovin Strickland and I and we are 4 00:00:17,079 --> 00:00:20,840 Speaker 1: continuing our epic adventure into the story of HBO. This 5 00:00:20,920 --> 00:00:23,520 Speaker 1: is part two. If you haven't listened to part one, 6 00:00:23,600 --> 00:00:25,840 Speaker 1: I highly recommend you do that because otherwise you're just 7 00:00:25,840 --> 00:00:28,360 Speaker 1: gonna be totally lost. And because it's probably you've never 8 00:00:28,360 --> 00:00:30,200 Speaker 1: heard of HBO before. No, but no, but we've covered 9 00:00:30,240 --> 00:00:33,080 Speaker 1: a lot of really is interesting territory. And we've only 10 00:00:33,120 --> 00:00:36,160 Speaker 1: been with the company for eight years since its inceptions. 11 00:00:36,159 --> 00:00:38,280 Speaker 1: That is how much material we had. We just moved 12 00:00:38,320 --> 00:00:41,760 Speaker 1: up to nineteen eighty and HBO launched in nineteen seventy two. 13 00:00:41,800 --> 00:00:45,120 Speaker 1: That just tells you how dense the history of this 14 00:00:45,320 --> 00:00:49,559 Speaker 1: cable station has been. And you know, the reason why 15 00:00:49,600 --> 00:00:52,080 Speaker 1: we're taking so much time. You might think all that 16 00:00:52,240 --> 00:00:54,600 Speaker 1: is that just filler. No, the reason we're taking so 17 00:00:54,680 --> 00:00:58,480 Speaker 1: much time is because HBO as an entity, has heavily 18 00:00:58,560 --> 00:01:03,200 Speaker 1: influenced what cable television is and what entertainment delivery services 19 00:01:03,240 --> 00:01:06,360 Speaker 1: are in general. If it hadn't been for HBO, our 20 00:01:06,440 --> 00:01:11,160 Speaker 1: landscape would be dramatically different today. So that's why we're 21 00:01:11,160 --> 00:01:14,280 Speaker 1: doing it. In fact, think about it. Without HBO, you 22 00:01:14,319 --> 00:01:19,520 Speaker 1: don't have cable companies, cable system operators pushing cable copper 23 00:01:19,600 --> 00:01:23,280 Speaker 1: cable into cities anywhere near as quickly. Right, you might 24 00:01:23,360 --> 00:01:25,120 Speaker 1: not have ever seen it happen, or it might have 25 00:01:25,160 --> 00:01:27,920 Speaker 1: taken a decade longer, which means you would not even 26 00:01:27,959 --> 00:01:31,600 Speaker 1: have the infrastructure that the Internet relies on today. For 27 00:01:31,800 --> 00:01:35,600 Speaker 1: high speed Internet, we'd be using telephone lines. Still. Yeah, 28 00:01:35,680 --> 00:01:39,120 Speaker 1: you might furthermore not have had people adopt as quickly 29 00:01:39,160 --> 00:01:44,520 Speaker 1: the idea of using satellites to beam information, uh television 30 00:01:44,520 --> 00:01:50,040 Speaker 1: information out to many spread networks exactly. So, like we said, 31 00:01:50,160 --> 00:01:53,280 Speaker 1: landscape very different without HBO. Whether you love it or 32 00:01:53,320 --> 00:01:56,600 Speaker 1: hate it, it's a large part of why the world 33 00:01:56,920 --> 00:01:59,720 Speaker 1: is as far as the cable world and entertainment worlds, 34 00:01:59,720 --> 00:02:02,560 Speaker 1: why things are the way they are so so um. 35 00:02:02,600 --> 00:02:07,080 Speaker 1: A little tiny bit of backstory, very tiny. HBO owned 36 00:02:07,120 --> 00:02:11,679 Speaker 1: by Time, Yes, Time Incorporated, not not Time, the the 37 00:02:11,720 --> 00:02:15,600 Speaker 1: physical entity like the actual not Father Time, not the 38 00:02:15,600 --> 00:02:21,480 Speaker 1: progression of changes throughout, not the fourth dimension. Time Incorporated, 39 00:02:21,520 --> 00:02:24,600 Speaker 1: the company that owned Time magazine or still does Time Magazine, 40 00:02:24,600 --> 00:02:28,840 Speaker 1: Fortune Magazine, Sports Illustrated etcetera, etcetera. Correct, So in Time 41 00:02:28,960 --> 00:02:32,640 Speaker 1: launched a second pay TV channel called Cinemax, primarily as 42 00:02:32,639 --> 00:02:37,680 Speaker 1: a competitor to the less expensive Showtime. Yes, so there 43 00:02:37,680 --> 00:02:39,919 Speaker 1: were a couple of different ways to compete against Showtime. 44 00:02:39,960 --> 00:02:42,800 Speaker 1: One was, let's try and grab as much exclusive content 45 00:02:42,840 --> 00:02:45,760 Speaker 1: as we possibly can that Showtime can't have, and thus 46 00:02:45,760 --> 00:02:48,240 Speaker 1: people will say, hey, we want HBO because they have 47 00:02:48,400 --> 00:02:52,800 Speaker 1: these movies and Showtime doesn't. However, that's really expensive. Another 48 00:02:52,840 --> 00:02:56,400 Speaker 1: approach was to create a second page television network, Cinemax, 49 00:02:56,760 --> 00:02:59,400 Speaker 1: and to run a lot of the same programming that 50 00:02:59,560 --> 00:03:03,600 Speaker 1: HBO itself already had, and maybe concentrate on some genres 51 00:03:03,639 --> 00:03:09,080 Speaker 1: that didn't necessarily fit into HBO's corporate appearances, like they're there, 52 00:03:08,800 --> 00:03:12,080 Speaker 1: their their culture, and furthermore, that happened to be a 53 00:03:12,120 --> 00:03:15,040 Speaker 1: lot less expensive to purchase. Like I like cult films 54 00:03:15,120 --> 00:03:18,280 Speaker 1: and kind of obscure noir stuff. One of my favorite 55 00:03:18,280 --> 00:03:21,440 Speaker 1: cult films of all time I first saw on Cinemax. 56 00:03:21,520 --> 00:03:23,680 Speaker 1: I had heard about it, but I've never seen it. 57 00:03:24,040 --> 00:03:27,919 Speaker 1: And that film, of course, is the brilliant movie Shock Treatment. 58 00:03:28,400 --> 00:03:31,400 Speaker 1: The not a sequel, not a prequel, but an equal 59 00:03:31,560 --> 00:03:34,000 Speaker 1: to the Rocky Horror Picture Show and that's how I 60 00:03:34,040 --> 00:03:36,440 Speaker 1: saw it the first time I ever experienced it. It 61 00:03:36,480 --> 00:03:39,640 Speaker 1: was shown on Cinemax because it fit into that realm 62 00:03:39,760 --> 00:03:42,560 Speaker 1: of the Cinemax movie where it were there were some 63 00:03:42,640 --> 00:03:45,400 Speaker 1: of these kind of cult, classic, schlocky, sort of cheap 64 00:03:45,480 --> 00:03:49,680 Speaker 1: movies to license, but they still had their audience. So 65 00:03:50,600 --> 00:03:55,440 Speaker 1: this approach did not come without criticism, specifically from Viacom, 66 00:03:55,480 --> 00:03:58,440 Speaker 1: which was the parent company of Showtime. They said that 67 00:03:58,480 --> 00:04:01,400 Speaker 1: Cinemax was being offered at low cost. In other words, 68 00:04:01,680 --> 00:04:04,640 Speaker 1: HBO was suffering a loss to run Cinemax just so 69 00:04:04,680 --> 00:04:09,160 Speaker 1: that they could undercut Showtime. Uh now, if you remember 70 00:04:09,720 --> 00:04:12,640 Speaker 1: Showtime kind of if Viacom also did this thing in 71 00:04:12,640 --> 00:04:14,840 Speaker 1: the last episode we talked about, where it showed Viacomm 72 00:04:14,920 --> 00:04:19,800 Speaker 1: ended up buying aggressively undercut HBO. They essentially muscled HBO 73 00:04:19,920 --> 00:04:23,599 Speaker 1: out of entire markets because they made this exclusive agreement 74 00:04:23,640 --> 00:04:26,680 Speaker 1: with the largest cable provider in the United States at 75 00:04:26,680 --> 00:04:29,160 Speaker 1: that time. So there's a little bit of a war 76 00:04:29,320 --> 00:04:32,280 Speaker 1: going on. Yeah, a little bit of a oh yeah, 77 00:04:32,560 --> 00:04:35,280 Speaker 1: so yeah, that's that's kind of the technical term. But Cinemax, 78 00:04:35,480 --> 00:04:38,640 Speaker 1: you know, starts doing pretty well. And also in nineteen eight, 79 00:04:38,880 --> 00:04:41,800 Speaker 1: HBO has an affiliate in every single state in the 80 00:04:41,920 --> 00:04:44,520 Speaker 1: United States. Now, if you listen to our last episode, 81 00:04:44,520 --> 00:04:46,919 Speaker 1: you realize that's a big deal. This is the first 82 00:04:46,960 --> 00:04:49,280 Speaker 1: time that any channel has been able to do that, 83 00:04:49,600 --> 00:04:53,080 Speaker 1: and it is because they're using this satellite delivery system 84 00:04:53,080 --> 00:04:56,320 Speaker 1: where the various cable operators across the United States have 85 00:04:56,520 --> 00:04:59,800 Speaker 1: the receiver dishes that bring in the signal and then 86 00:04:59,839 --> 00:05:02,360 Speaker 1: they can distribute it to their customers. So now there's 87 00:05:02,360 --> 00:05:05,200 Speaker 1: an affiliate in every state. Remember it started off justin 88 00:05:05,279 --> 00:05:09,080 Speaker 1: Wilkes Barre, Pennsylvania. Then it's spread through most of Pennsylvania, 89 00:05:09,160 --> 00:05:11,599 Speaker 1: then to New York, and then finally started to creep 90 00:05:11,600 --> 00:05:14,240 Speaker 1: out into the rest of the United States. So big 91 00:05:14,279 --> 00:05:17,200 Speaker 1: moment for HBO. All of this is allowing them to 92 00:05:17,240 --> 00:05:20,560 Speaker 1: have a pretty incredible profit considering that they only hit 93 00:05:20,600 --> 00:05:25,040 Speaker 1: profitability a year or two previously. Um they their profits 94 00:05:25,080 --> 00:05:30,560 Speaker 1: have grown from which again understandable because now they're they're 95 00:05:30,600 --> 00:05:34,599 Speaker 1: available in way more markets. So the company is experiencing 96 00:05:34,720 --> 00:05:38,159 Speaker 1: astronomical growth at this point because because once the cable 97 00:05:38,200 --> 00:05:41,960 Speaker 1: operators decide yes, we will carry HBO, that gives HBO 98 00:05:42,080 --> 00:05:45,640 Speaker 1: the chance to target new customer bases that they had 99 00:05:45,680 --> 00:05:48,640 Speaker 1: no access to before. Oh sure, um and there as 100 00:05:48,680 --> 00:05:52,400 Speaker 1: a result able to offer their employees some pretty ridiculous benefits. 101 00:05:52,640 --> 00:05:54,920 Speaker 1: Um It. Kind of the stories that I've read about 102 00:05:54,920 --> 00:05:56,920 Speaker 1: it at the time remind me a little bit of 103 00:05:57,000 --> 00:06:00,280 Speaker 1: what happened after the Facebook boom um and and just 104 00:06:00,360 --> 00:06:05,560 Speaker 1: that that tiny, free, freewheeling startup culture that turned into 105 00:06:05,920 --> 00:06:10,359 Speaker 1: this very large, very freewheeling startup culture. It reminds me 106 00:06:10,400 --> 00:06:14,400 Speaker 1: a lot of what Google attempts to continue to push 107 00:06:14,480 --> 00:06:17,120 Speaker 1: at the Google Plex. And of course, anyone who's worked 108 00:06:17,120 --> 00:06:19,880 Speaker 1: in one of the satellite offices of Google probably is 109 00:06:19,960 --> 00:06:22,640 Speaker 1: very familiar with what things what what's available at the 110 00:06:22,640 --> 00:06:25,440 Speaker 1: Google Plex versus what's available in some of those satellite offices. 111 00:06:26,600 --> 00:06:30,720 Speaker 1: So there was also some tension between say HBO and 112 00:06:30,800 --> 00:06:33,720 Speaker 1: the folks over at time. Keep in mind that at 113 00:06:33,720 --> 00:06:36,400 Speaker 1: this point they're still all working in the same building. 114 00:06:36,520 --> 00:06:39,760 Speaker 1: They're working in Time Incorporate its headquarters, and so you 115 00:06:39,839 --> 00:06:44,320 Speaker 1: had sort of these freewheeling young guys who are running HBO, 116 00:06:44,440 --> 00:06:47,000 Speaker 1: who are having parties all the time. They said that 117 00:06:47,160 --> 00:06:50,760 Speaker 1: essentially the the motto at HBO is work, work, work, party, party, party, 118 00:06:50,920 --> 00:06:54,240 Speaker 1: and uh and so you know, any excuse to get 119 00:06:54,320 --> 00:06:56,840 Speaker 1: together and have a big dinner and you know, they're 120 00:06:56,839 --> 00:06:59,520 Speaker 1: still getting stuff done. But they also took a lot 121 00:06:59,520 --> 00:07:03,000 Speaker 1: of time and develop this camaraderie. There's still some tension 122 00:07:03,080 --> 00:07:07,080 Speaker 1: actually within the company itself because a very different culture 123 00:07:07,240 --> 00:07:11,680 Speaker 1: existed between Time and Coorporated employees and HBO. Now in 124 00:07:12,480 --> 00:07:15,160 Speaker 1: one Showtime makes a big move, which you could argue 125 00:07:15,160 --> 00:07:18,640 Speaker 1: at the time was mostly posturing. Uh. They decided to 126 00:07:18,720 --> 00:07:22,320 Speaker 1: go to a full twenty four hour schedule, right because 127 00:07:22,560 --> 00:07:24,960 Speaker 1: if you remember from our last episode again, at the time, 128 00:07:25,040 --> 00:07:27,320 Speaker 1: these cable stations would sign off at a certain point 129 00:07:27,360 --> 00:07:30,640 Speaker 1: every night. Yeah, like after midnight they'd say, all right, time, 130 00:07:30,720 --> 00:07:32,200 Speaker 1: time to go to bed, because we don't have anything 131 00:07:32,200 --> 00:07:34,640 Speaker 1: else we can show you. So Showtime goes to twenty 132 00:07:34,640 --> 00:07:38,160 Speaker 1: four hours, not necessarily being able to support that with 133 00:07:38,360 --> 00:07:42,480 Speaker 1: enough content so that they're not incredibly repetitive. But HBO, 134 00:07:42,560 --> 00:07:45,440 Speaker 1: not to be outdone, follow suit. So later on in 135 00:07:45,520 --> 00:07:49,400 Speaker 1: N one, they also become twenty four hour uh. And 136 00:07:49,480 --> 00:07:51,480 Speaker 1: so you with anytime you wanted to turn on HBO 137 00:07:51,600 --> 00:07:53,080 Speaker 1: it was three in the morning, you can turn on 138 00:07:53,200 --> 00:07:57,600 Speaker 1: HBO and something would be playing. Uh. And then they 139 00:07:57,720 --> 00:08:00,520 Speaker 1: end up also hitting the big time on of those 140 00:08:00,600 --> 00:08:02,760 Speaker 1: pre buy movies we talked about. Now, this is where 141 00:08:02,880 --> 00:08:05,960 Speaker 1: HBO puts in money in the pre production phase for 142 00:08:06,360 --> 00:08:09,520 Speaker 1: a movie and in return, they get exclusive rights to 143 00:08:09,680 --> 00:08:12,360 Speaker 1: show that movie on HBO for a certain length of time. 144 00:08:13,040 --> 00:08:16,320 Speaker 1: And in this case, they hit the jackpot. Now, it's 145 00:08:16,320 --> 00:08:18,880 Speaker 1: not a movie that I think a lot of people 146 00:08:19,000 --> 00:08:21,800 Speaker 1: are going to be rip roar and excited about, but 147 00:08:21,920 --> 00:08:26,160 Speaker 1: it was a critically acclaimed success. It was on Golden Pond. Yeah, 148 00:08:26,240 --> 00:08:30,680 Speaker 1: it won multiple Academy Awards yep. So this exclusivity was 149 00:08:30,720 --> 00:08:33,320 Speaker 1: a big deal. It was a movie that people had 150 00:08:33,360 --> 00:08:35,840 Speaker 1: heard about, they knew that it was award winning, and 151 00:08:36,000 --> 00:08:38,480 Speaker 1: HBO was the only place you could see it outside 152 00:08:38,480 --> 00:08:40,560 Speaker 1: of the theater. Keep in mind, this is before the 153 00:08:40,640 --> 00:08:44,560 Speaker 1: home video craze starts, like, this is really before the 154 00:08:44,800 --> 00:08:48,840 Speaker 1: VCR has taken off. So HBO exclusivity in this case 155 00:08:49,000 --> 00:08:53,040 Speaker 1: was really important. Now they started moving to these output deals, 156 00:08:53,040 --> 00:08:55,199 Speaker 1: which is when a pay TV service agrees to take 157 00:08:55,240 --> 00:08:57,680 Speaker 1: on all the movies made by a certain studio over 158 00:08:57,760 --> 00:09:00,800 Speaker 1: a certain time span. Again, tends to be kind of 159 00:09:00,840 --> 00:09:03,640 Speaker 1: a grab bag situation. You might get a few big hits, 160 00:09:03,760 --> 00:09:05,920 Speaker 1: you might have some mediocre films in there that you know, 161 00:09:06,000 --> 00:09:08,040 Speaker 1: some people care about. But most people don't, and you 162 00:09:08,080 --> 00:09:10,720 Speaker 1: can have some outright flops, so a little bit of 163 00:09:10,720 --> 00:09:13,720 Speaker 1: a risky situation. There's also this idea of a multi 164 00:09:13,800 --> 00:09:16,200 Speaker 1: year agreement which HBO would agree to pick up a 165 00:09:16,200 --> 00:09:18,680 Speaker 1: certain number of films the studio would produce over a 166 00:09:18,679 --> 00:09:20,719 Speaker 1: given period of time, but have a little bit more 167 00:09:20,800 --> 00:09:25,240 Speaker 1: safe which one like you made, we want twenty movies 168 00:09:25,240 --> 00:09:26,720 Speaker 1: that you guys are going to make over the course 169 00:09:26,720 --> 00:09:30,600 Speaker 1: of the next five years. Yeah. So once the five 170 00:09:30,679 --> 00:09:35,600 Speaker 1: year period starts coming up, you're like, well, now we're stuck. Yeah, 171 00:09:35,679 --> 00:09:37,560 Speaker 1: but but we got to be choosy at the beginning. 172 00:09:38,160 --> 00:09:42,640 Speaker 1: Either way, these exclusivity deals were really really expensive, and 173 00:09:42,840 --> 00:09:46,080 Speaker 1: it meant that it was tough to to make a 174 00:09:46,080 --> 00:09:49,360 Speaker 1: profit unless you continuously grow. Now, at this time that 175 00:09:49,440 --> 00:09:53,240 Speaker 1: wasn't a problem because cable was still entering in lots 176 00:09:53,280 --> 00:09:56,319 Speaker 1: more markets, which meant you had access to brand new customers. 177 00:09:56,679 --> 00:09:59,680 Speaker 1: So in the early days kind of automatically growing. Yeah. Yeah, 178 00:09:59,840 --> 00:10:02,960 Speaker 1: you didn't have to worry about about boosting your your 179 00:10:02,960 --> 00:10:05,320 Speaker 1: customer base so much because people were still eager to join. 180 00:10:05,880 --> 00:10:07,719 Speaker 1: It wasn't until a couple of years later that things 181 00:10:07,760 --> 00:10:10,800 Speaker 1: got a little tougher. But we'll get there. So companies 182 00:10:10,800 --> 00:10:12,960 Speaker 1: were paying these big bucks for exclusive rights to movies 183 00:10:13,000 --> 00:10:16,640 Speaker 1: for just a couple of years. Eventually those exclusivity rights 184 00:10:16,679 --> 00:10:19,920 Speaker 1: would expire and those movies could be carried on other 185 00:10:19,960 --> 00:10:23,560 Speaker 1: pay television stations like Showtime could pick it up. So 186 00:10:23,920 --> 00:10:27,280 Speaker 1: in the long run, you would have a bank of 187 00:10:27,360 --> 00:10:31,520 Speaker 1: movies that was essentially identical to your competitors. So for 188 00:10:31,559 --> 00:10:33,840 Speaker 1: a couple of years you have exclusivity, but it wasn't 189 00:10:33,840 --> 00:10:37,040 Speaker 1: a long term you would up even out. Yeah. So yeah, 190 00:10:37,040 --> 00:10:39,560 Speaker 1: one of those things that that you know, they really 191 00:10:39,559 --> 00:10:42,360 Speaker 1: had to look at a little bit later because it 192 00:10:42,400 --> 00:10:44,760 Speaker 1: was just it was not the best way to continuously 193 00:10:44,800 --> 00:10:50,000 Speaker 1: grow your revenue. Now we get one of my favorite stories. 194 00:10:50,320 --> 00:10:52,560 Speaker 1: Yeah yeah, okay, this this is a big one. So 195 00:10:52,559 --> 00:10:56,720 Speaker 1: so twenty century Fox negotiated to get Star Wars onto 196 00:10:56,760 --> 00:11:02,360 Speaker 1: pay TV. Yes, so Star Wars big movie. Of course, 197 00:11:02,360 --> 00:11:04,320 Speaker 1: that's when Return of the Jedi came out. So the 198 00:11:04,320 --> 00:11:07,000 Speaker 1: original trilogy, you know, the only one that exists, is 199 00:11:07,040 --> 00:11:10,040 Speaker 1: complete at this time, and Star Wars itself, the movie 200 00:11:10,080 --> 00:11:14,000 Speaker 1: that started it all. Uh, the second big blockbuster following 201 00:11:14,080 --> 00:11:18,640 Speaker 1: Jaws from is available to go on to pay TV. However, 202 00:11:19,040 --> 00:11:21,360 Speaker 1: it's not an exclusive deal. This is something they they 203 00:11:21,400 --> 00:11:25,240 Speaker 1: negotiate to put it on every page television station essentially, 204 00:11:25,240 --> 00:11:27,960 Speaker 1: so Showtime's gonna get HBO is gonna get it now. Normally, 205 00:11:28,400 --> 00:11:32,119 Speaker 1: the way these channels like to try and and position 206 00:11:32,280 --> 00:11:35,439 Speaker 1: the big ticket items that they get is to wait 207 00:11:35,840 --> 00:11:40,840 Speaker 1: and put it out on prime time preferably like eight pm, yeah, Friday, Saturday, 208 00:11:40,880 --> 00:11:43,959 Speaker 1: Sunday night, Sunday night, probably preferably to to really get 209 00:11:44,000 --> 00:11:46,280 Speaker 1: all of the home viewers in right, so you would 210 00:11:46,320 --> 00:11:49,000 Speaker 1: you know when the weekend would come around eight pm. 211 00:11:49,040 --> 00:11:50,960 Speaker 1: That's when you could be guaranteed that that was when 212 00:11:51,000 --> 00:11:55,360 Speaker 1: the biggest movies were going to be uh showcased on 213 00:11:55,480 --> 00:11:58,640 Speaker 1: these pay television stations. However, Star Wars was such a 214 00:11:58,679 --> 00:12:02,280 Speaker 1: big deal, being that summer blockbuster, that both Showtime and 215 00:12:02,400 --> 00:12:06,400 Speaker 1: HBO wanted to make sure they took advantage of it 216 00:12:06,480 --> 00:12:08,640 Speaker 1: and did not allow the other channel to show it 217 00:12:08,679 --> 00:12:11,280 Speaker 1: before they did. So, HBO didn't want Showtime to show 218 00:12:11,280 --> 00:12:13,559 Speaker 1: it first. Showtime didn't want HBO to show it first. 219 00:12:13,720 --> 00:12:17,320 Speaker 1: According to the agreement they signed with Fox, neither could 220 00:12:17,320 --> 00:12:21,640 Speaker 1: show it any time before six am on February one, 221 00:12:21,760 --> 00:12:24,120 Speaker 1: so both of them scheduled the first showing of Star 222 00:12:24,160 --> 00:12:27,760 Speaker 1: Wars to be six am February first, even knowing that 223 00:12:27,760 --> 00:12:30,720 Speaker 1: that's not an ideal time for their customers. They just 224 00:12:30,760 --> 00:12:32,199 Speaker 1: didn't want the other one to get the scoop, and 225 00:12:32,320 --> 00:12:36,040 Speaker 1: HBO went a step further. So remember in that last 226 00:12:36,080 --> 00:12:38,360 Speaker 1: episode where I talked about cable being a cutthroat business 227 00:12:38,360 --> 00:12:43,120 Speaker 1: and nothing is really you know, off limits. That includes bribery. 228 00:12:43,240 --> 00:12:47,079 Speaker 1: That's probably a strong word. HBO didn't bribe twentieth Century Fox. Well, 229 00:12:47,120 --> 00:12:49,920 Speaker 1: they paid them more money. They paid them more money. 230 00:12:50,000 --> 00:12:52,040 Speaker 1: That's very much like a bride. Yeah, so that they 231 00:12:52,040 --> 00:12:55,400 Speaker 1: could be allowed to show Star Wars one minute after 232 00:12:55,520 --> 00:12:59,520 Speaker 1: midnight on February one, so six hours before showtime could 233 00:12:59,600 --> 00:13:02,400 Speaker 1: although they weren't allowed to announce it. Yeah, so you 234 00:13:02,480 --> 00:13:06,120 Speaker 1: had to have been watching HBO at one midnight and 235 00:13:06,280 --> 00:13:09,280 Speaker 1: one minute after midnight on February one to have noticed 236 00:13:09,320 --> 00:13:12,920 Speaker 1: that this had happened. However, the they were able to 237 00:13:12,960 --> 00:13:17,199 Speaker 1: say legitimately that they were the first paid television station 238 00:13:17,679 --> 00:13:20,160 Speaker 1: to carry Star Wars, and that actually carried some weight. 239 00:13:20,559 --> 00:13:22,400 Speaker 1: There were people who said, wait a minute, why is 240 00:13:22,520 --> 00:13:25,720 Speaker 1: HBO showing it before showtime? I should have HBO not showtime. 241 00:13:25,800 --> 00:13:28,000 Speaker 1: Despite the fact that we're talking about a six hour 242 00:13:28,080 --> 00:13:32,440 Speaker 1: window when most people wouldn't be watching television anyway. Um, 243 00:13:32,520 --> 00:13:37,320 Speaker 1: that that part didn't matter. So very interesting that this 244 00:13:37,760 --> 00:13:40,880 Speaker 1: battle happened. It was another expensive battle, but an important one. 245 00:13:40,960 --> 00:13:42,400 Speaker 1: As we all know, Star Wars one of the most 246 00:13:42,400 --> 00:13:45,560 Speaker 1: important pieces of art created in the history. There's like 247 00:13:47,200 --> 00:13:51,280 Speaker 1: the Mona Lisa Star Wars David, that's the order it 248 00:13:51,320 --> 00:13:56,240 Speaker 1: goes in. So three. Also, there was another amazing piece 249 00:13:56,280 --> 00:14:01,240 Speaker 1: of art premiered on HBO and original program aimed at children. Yeah, 250 00:14:01,320 --> 00:14:04,719 Speaker 1: Jim Henson's Fraggle Rock. Yeah, down in Fraggle Rock. So 251 00:14:04,880 --> 00:14:07,520 Speaker 1: I was a huge Fraggle Rock fan to back in 252 00:14:07,559 --> 00:14:10,679 Speaker 1: the day. Um, they actually came to dragon Con and 253 00:14:10,840 --> 00:14:13,880 Speaker 1: we covered the dragon Con parade. We actually shut this coverage. 254 00:14:13,960 --> 00:14:15,800 Speaker 1: Me and Ben Bowlen and Lauren You were there and 255 00:14:16,240 --> 00:14:18,920 Speaker 1: we did it like Macy's Thanksgiving Day parade style. It 256 00:14:19,000 --> 00:14:21,440 Speaker 1: never it never saw the light of day, probably because 257 00:14:21,480 --> 00:14:24,000 Speaker 1: there were long stretches where nothing was happening. Oh we 258 00:14:24,000 --> 00:14:26,520 Speaker 1: we we haven't had anyone had time to edit the 259 00:14:26,520 --> 00:14:29,280 Speaker 1: who whole thing was really long. It was very long. Yeah, 260 00:14:29,320 --> 00:14:31,360 Speaker 1: but the Fraggles were in it. They were in it. 261 00:14:31,400 --> 00:14:33,480 Speaker 1: And there is a photo gallery that I did I 262 00:14:33,480 --> 00:14:36,120 Speaker 1: was running a still camera through the parade and so 263 00:14:36,280 --> 00:14:38,640 Speaker 1: and and she she waved at me. Yeah. I got 264 00:14:38,680 --> 00:14:41,560 Speaker 1: choked up, Yeah, I got choked up watching the Fraggles. 265 00:14:41,600 --> 00:14:43,560 Speaker 1: I mean, I'm not I'm not embarrassed to admit it. 266 00:14:43,720 --> 00:14:45,280 Speaker 1: The Fraggles meant a lot to be I'm getting a 267 00:14:45,280 --> 00:14:47,840 Speaker 1: little tiory right now in fact, but anyway, Jim Henson 268 00:14:48,240 --> 00:14:52,280 Speaker 1: Fraggle Rock. Now, Jim Henson had already had a relationship 269 00:14:52,320 --> 00:14:55,280 Speaker 1: with HBO. HBO had produced a couple of years earlier 270 00:14:55,520 --> 00:14:59,120 Speaker 1: a Christmas special Emitt Otter's jug Band Christmas. So now 271 00:14:59,280 --> 00:15:03,320 Speaker 1: Jim Henson had the freedom to create this entire children's series, 272 00:15:03,320 --> 00:15:07,160 Speaker 1: which lasted five seasons, and it ended up being a 273 00:15:07,200 --> 00:15:10,440 Speaker 1: big success. It was one of the few breakaway successes 274 00:15:10,560 --> 00:15:12,960 Speaker 1: of children's programming on HBO. A lot of the other 275 00:15:13,000 --> 00:15:16,960 Speaker 1: programming UH people liked the idea of but no one 276 00:15:17,080 --> 00:15:21,200 Speaker 1: ever bothered to watch, so Fraggle Rock was not among that. 277 00:15:21,200 --> 00:15:24,000 Speaker 1: That was an incredibly popular show, in fact, so popular 278 00:15:24,440 --> 00:15:28,760 Speaker 1: that HBO would end up making other versions of Fraggle 279 00:15:28,840 --> 00:15:32,160 Speaker 1: Rock for other countries, and some of them would have 280 00:15:32,480 --> 00:15:36,240 Speaker 1: their own version of Doc and Sprocket that wouldn't necessarily 281 00:15:36,280 --> 00:15:38,320 Speaker 1: be called Doc and Sprocket and they would be different 282 00:15:38,360 --> 00:15:39,920 Speaker 1: people like that. I think in England it was like 283 00:15:40,000 --> 00:15:44,280 Speaker 1: a lighthouse keeper who was really crabby. But anyway, they 284 00:15:44,320 --> 00:15:46,920 Speaker 1: would also be dubbed into different languages, so everyone had 285 00:15:46,960 --> 00:15:49,760 Speaker 1: their own version of Fraggle Rock, which was kind of cool. 286 00:15:49,800 --> 00:15:52,640 Speaker 1: It wasn't just a you know, it wasn't just switching 287 00:15:52,640 --> 00:15:56,640 Speaker 1: out the soundtrack. It was actually Taylor made to these nations. Uh. 288 00:15:56,680 --> 00:15:59,000 Speaker 1: And another series that premiered that year, and I remember 289 00:15:59,040 --> 00:16:02,360 Speaker 1: this series too, was not necessarily The News, which was 290 00:16:02,400 --> 00:16:05,080 Speaker 1: kind of a news parody sketch comedy show. It was 291 00:16:05,200 --> 00:16:09,280 Speaker 1: the news thing was kind of the the conceit the 292 00:16:09,320 --> 00:16:12,600 Speaker 1: bookends for these various sketches that may or may not 293 00:16:12,640 --> 00:16:15,720 Speaker 1: be very loosely connected, right, And it was kind of no. 294 00:16:15,800 --> 00:16:20,040 Speaker 1: Brian's very first television writing gig also uh not consistently 295 00:16:20,160 --> 00:16:23,480 Speaker 1: very good, but but one of the examples of HBO 296 00:16:23,520 --> 00:16:27,360 Speaker 1: getting into original programming, which is again they started looking 297 00:16:27,520 --> 00:16:31,040 Speaker 1: at how to differentiate themselves from the showtimes of the world, 298 00:16:31,560 --> 00:16:34,400 Speaker 1: and these exclusivity deals, like we said, could be really 299 00:16:34,400 --> 00:16:39,040 Speaker 1: really expensive, so maybe making original programming would have been 300 00:16:39,160 --> 00:16:42,840 Speaker 1: a better approach. Now they learned that making good original 301 00:16:42,880 --> 00:16:45,720 Speaker 1: programming is very tricky. It might not be expensive, but 302 00:16:45,840 --> 00:16:48,680 Speaker 1: it's very hard to do, and getting people to pay 303 00:16:48,720 --> 00:16:52,520 Speaker 1: attention is also sometimes tricky. Right, Yeah, sometimes they would 304 00:16:52,520 --> 00:16:56,040 Speaker 1: make an amazing show that the critics loved in nobody watched. 305 00:16:56,120 --> 00:16:58,840 Speaker 1: We will talk about several of those in our third episode. 306 00:16:58,920 --> 00:17:02,600 Speaker 1: But meanwhile, in nine, twelve years after its inception, HBO 307 00:17:02,680 --> 00:17:05,840 Speaker 1: finally got their own offices. Yeah, they moved over into 308 00:17:05,880 --> 00:17:09,399 Speaker 1: a building on Avenue, and it had the nickname the 309 00:17:09,440 --> 00:17:14,520 Speaker 1: flash Cube. All right, kids, years ago, like in the eighties, 310 00:17:15,160 --> 00:17:18,680 Speaker 1: cameras which had film in them, none of this digital 311 00:17:18,680 --> 00:17:23,400 Speaker 1: stuff also had flash you know, flashes like a separate 312 00:17:23,480 --> 00:17:26,760 Speaker 1: flash unity had to attach to the top little cube 313 00:17:27,240 --> 00:17:29,640 Speaker 1: that would flash light so you could get some light 314 00:17:29,760 --> 00:17:33,080 Speaker 1: on that image you're trying to capture onto film. That's 315 00:17:33,080 --> 00:17:34,720 Speaker 1: why it was called the flash cube because the building 316 00:17:34,720 --> 00:17:37,080 Speaker 1: looked like one. So this building that looked like something 317 00:17:37,119 --> 00:17:40,280 Speaker 1: you've never seen looked exactly like just just like that thing. 318 00:17:40,480 --> 00:17:45,360 Speaker 1: So now you had a building where the actual departments 319 00:17:45,359 --> 00:17:48,680 Speaker 1: could all sit together. The divisions were no longer divided. 320 00:17:49,000 --> 00:17:51,919 Speaker 1: They could all be in a cohesive unit. So that 321 00:17:52,080 --> 00:17:55,399 Speaker 1: amazing camaraderie they had developed back at Time Incorporated when 322 00:17:55,400 --> 00:17:58,880 Speaker 1: they had this kind of startup mentality went away. It's 323 00:17:58,920 --> 00:18:02,120 Speaker 1: completely ruined. Yeah, Suddenly they were physically closer and yet 324 00:18:02,280 --> 00:18:06,119 Speaker 1: emotionally so distant. Um. It turned out that HBO was 325 00:18:06,119 --> 00:18:08,280 Speaker 1: starting to become more of a business, less of this 326 00:18:08,359 --> 00:18:11,919 Speaker 1: kind of startup entrepreneur approach, and I had more of 327 00:18:12,000 --> 00:18:15,040 Speaker 1: a of a corporate structure. Yeah. And it also was 328 00:18:15,280 --> 00:18:19,000 Speaker 1: when HBO started to notice that growing as a business 329 00:18:19,040 --> 00:18:21,800 Speaker 1: was going to get very difficult, they did what was 330 00:18:21,840 --> 00:18:26,000 Speaker 1: called hitting the wall. The wall in this case was saturation. 331 00:18:26,280 --> 00:18:29,600 Speaker 1: You had a saturation point where cable had pretty much 332 00:18:29,680 --> 00:18:32,359 Speaker 1: entered all the markets that was gonna go into. So 333 00:18:32,440 --> 00:18:34,920 Speaker 1: that meant that you no longer could expect to suddenly 334 00:18:34,920 --> 00:18:39,360 Speaker 1: have access to twenty thousand new subscribers potential new subscribers 335 00:18:39,800 --> 00:18:43,399 Speaker 1: because someone finally built the infrastructure out to this one region. 336 00:18:43,800 --> 00:18:46,239 Speaker 1: Now all the regions pretty much had cable, So they 337 00:18:46,280 --> 00:18:48,200 Speaker 1: were not going to be any of these these gift 338 00:18:48,240 --> 00:18:51,639 Speaker 1: baskets of potential customers just arriving at HBO. They were 339 00:18:51,640 --> 00:18:54,120 Speaker 1: gonna have to work for it. And also on top 340 00:18:54,160 --> 00:18:56,360 Speaker 1: of that, they had a churn rate going on right. 341 00:18:57,200 --> 00:19:00,000 Speaker 1: So churn rate is when you lose a certain number 342 00:19:00,280 --> 00:19:04,720 Speaker 1: of customers over a course of a general amount of time. 343 00:19:04,760 --> 00:19:08,119 Speaker 1: So there's was about two percent per month back in, 344 00:19:09,200 --> 00:19:11,639 Speaker 1: which means that in order to just stay even, you 345 00:19:11,720 --> 00:19:14,679 Speaker 1: have to grow by two percent, right to to just 346 00:19:14,760 --> 00:19:17,199 Speaker 1: maintain the same number of customers from the beginning of 347 00:19:17,200 --> 00:19:18,560 Speaker 1: the month to the end of the month. If you 348 00:19:18,600 --> 00:19:20,439 Speaker 1: want to grow beyond that, then obviously you have to 349 00:19:20,440 --> 00:19:23,280 Speaker 1: get more than two percent new customers to replace the 350 00:19:23,280 --> 00:19:25,520 Speaker 1: two percent who who left. Now, some of the people 351 00:19:25,520 --> 00:19:28,640 Speaker 1: who left, they left because they were relocating and eventually 352 00:19:28,680 --> 00:19:31,359 Speaker 1: maybe they come back, but some of them were just saying, oh, 353 00:19:31,400 --> 00:19:33,439 Speaker 1: I don't want to have this expense anymore. So you 354 00:19:33,480 --> 00:19:36,840 Speaker 1: have to convince them, hey, we're worth the money, or 355 00:19:36,920 --> 00:19:39,080 Speaker 1: you had to convince new people, hey we're worth the money. 356 00:19:39,119 --> 00:19:41,639 Speaker 1: And now there are fewer new people to get access to. 357 00:19:42,440 --> 00:19:45,639 Speaker 1: So this was a very scary time at HBO. You 358 00:19:45,720 --> 00:19:48,840 Speaker 1: had this young company that had been used to this 359 00:19:48,920 --> 00:19:52,639 Speaker 1: incredible growth suddenly realizing, oh, things are not going to 360 00:19:52,760 --> 00:19:54,919 Speaker 1: be as easy anymore. We're not going to have this 361 00:19:55,600 --> 00:19:58,240 Speaker 1: essentially blank check that we can hand out for these 362 00:19:58,280 --> 00:20:01,920 Speaker 1: exclusivity deals. Were not gonna have this this endless line 363 00:20:01,920 --> 00:20:04,240 Speaker 1: of new customers coming in through the door. What are 364 00:20:04,240 --> 00:20:06,000 Speaker 1: we gonna do? And in fact, one of the first 365 00:20:06,040 --> 00:20:09,040 Speaker 1: things they had to do was layoff about a hundred 366 00:20:09,040 --> 00:20:11,439 Speaker 1: and twenty five employees, which was the first time in 367 00:20:11,600 --> 00:20:15,399 Speaker 1: HBO's history that people had been let go like that. Also, 368 00:20:15,440 --> 00:20:19,080 Speaker 1: around the same time, the VCR became a thing, and 369 00:20:19,160 --> 00:20:23,400 Speaker 1: that was a boy talk about a big bite out 370 00:20:23,400 --> 00:20:26,439 Speaker 1: of the business. So keep in mind, remember this is 371 00:20:26,440 --> 00:20:30,280 Speaker 1: the time when HBO their main purpose was to create 372 00:20:30,920 --> 00:20:33,480 Speaker 1: way for people to watch these movies that were uncut 373 00:20:33,520 --> 00:20:36,840 Speaker 1: and uncensored that wouldn't be carried on broadcast television. But 374 00:20:36,920 --> 00:20:39,280 Speaker 1: now with the birth of the VCR and the growth 375 00:20:39,359 --> 00:20:41,439 Speaker 1: of the home video market where you could go to 376 00:20:41,480 --> 00:20:43,880 Speaker 1: a rental store and rent a movie, you can get 377 00:20:43,920 --> 00:20:47,680 Speaker 1: access to all sorts of movies beyond the what we'll 378 00:20:47,720 --> 00:20:51,040 Speaker 1: call the playlist that HBO had access to. Remember, HBO's 379 00:20:51,080 --> 00:20:53,600 Speaker 1: paying licensing fees to be able to show these movies, 380 00:20:54,040 --> 00:20:56,439 Speaker 1: so they don't have licenses for every movie. They have 381 00:20:56,480 --> 00:20:59,520 Speaker 1: to pick and choose, and sometimes they pick before they 382 00:20:59,560 --> 00:21:01,119 Speaker 1: even know what the movie is going to be like, 383 00:21:01,160 --> 00:21:03,000 Speaker 1: and sometimes they lose out on that. Oh sure, and 384 00:21:03,040 --> 00:21:05,000 Speaker 1: they can only air so many things at a time, 385 00:21:05,040 --> 00:21:07,040 Speaker 1: they can only pay to keep so many things on 386 00:21:07,080 --> 00:21:09,560 Speaker 1: the air at a single time, and whatever they happen 387 00:21:09,640 --> 00:21:12,359 Speaker 1: to have might not be what you feel like watching. Once, 388 00:21:12,760 --> 00:21:18,000 Speaker 1: once stores started carrying rentable VHS tapes, it was I 389 00:21:18,040 --> 00:21:21,199 Speaker 1: mean for for younger listeners. I mean, like, I have 390 00:21:21,240 --> 00:21:24,200 Speaker 1: a hard time imagining this, and I remember VHS tapes. 391 00:21:24,240 --> 00:21:26,919 Speaker 1: I remember all of that very clearly, and and it 392 00:21:27,000 --> 00:21:29,399 Speaker 1: still sounds crazy to me that you that there was 393 00:21:29,440 --> 00:21:32,080 Speaker 1: a time when you couldn't just watch whatever you wanted. Yeah. 394 00:21:32,280 --> 00:21:34,119 Speaker 1: Now you would go into the store and you would 395 00:21:34,119 --> 00:21:37,960 Speaker 1: hope that that one copy of Young Einstein was still available, 396 00:21:38,359 --> 00:21:40,880 Speaker 1: because you know what a breakaway hit that was. Um, 397 00:21:40,960 --> 00:21:44,240 Speaker 1: hey that was an important film. Hey yeah, who's serious? 398 00:21:44,280 --> 00:21:46,840 Speaker 1: One of my heroes. Okay, I'm not don't take any 399 00:21:46,960 --> 00:21:50,199 Speaker 1: thing away from the series, but yeah, just just the 400 00:21:50,240 --> 00:21:52,080 Speaker 1: fact that you go into the store, you know, and 401 00:21:52,160 --> 00:21:54,400 Speaker 1: hope that the thing is the movie that you want 402 00:21:54,440 --> 00:21:56,679 Speaker 1: is there. There was an illusion that you had a 403 00:21:56,880 --> 00:21:59,760 Speaker 1: more choice with the home video market. Now, the truth 404 00:22:00,040 --> 00:22:04,200 Speaker 1: as dependent upon how many copies of a certain movie 405 00:22:04,280 --> 00:22:06,760 Speaker 1: the rental store had and how big a customer base 406 00:22:06,800 --> 00:22:09,000 Speaker 1: it had, Because there might be some movies that unless 407 00:22:09,000 --> 00:22:12,359 Speaker 1: you just looked out, we're constantly being checked out. So 408 00:22:12,359 --> 00:22:16,359 Speaker 1: so it even if Blockbuster had thirty copies of whatever 409 00:22:16,400 --> 00:22:18,600 Speaker 1: it was, it might all be gone right. So so 410 00:22:19,000 --> 00:22:23,080 Speaker 1: hypothetically you had a much larger choice, but in practice 411 00:22:23,160 --> 00:22:25,080 Speaker 1: it may or may not have happened. And either way, 412 00:22:25,080 --> 00:22:27,639 Speaker 1: it was probably more than just beast Master over and over. Yes, 413 00:22:28,280 --> 00:22:31,040 Speaker 1: HBO started getting the There was a joke that hbos 414 00:22:31,080 --> 00:22:35,679 Speaker 1: actually stood for hey beast Masters on um. Yeah, that 415 00:22:35,960 --> 00:22:39,280 Speaker 1: was the That was again a comment about the repeats, 416 00:22:39,880 --> 00:22:42,359 Speaker 1: uh and uh, which were the movies that had been 417 00:22:42,359 --> 00:22:46,280 Speaker 1: shown multiple times within a certain licensing period, and returns, 418 00:22:46,359 --> 00:22:49,000 Speaker 1: which were movies that were still under license but had 419 00:22:49,160 --> 00:22:52,159 Speaker 1: been pulled out of the circulation of movies shown on 420 00:22:52,280 --> 00:22:56,000 Speaker 1: HBO and then reinserted later on. So you know, HBO 421 00:22:56,200 --> 00:22:59,000 Speaker 1: licensed out these movies, and those licenses were very specific. 422 00:22:59,000 --> 00:23:02,240 Speaker 1: They would say you can show this movie X number 423 00:23:02,240 --> 00:23:06,560 Speaker 1: of times and during these times of day, Like they 424 00:23:06,560 --> 00:23:09,080 Speaker 1: were very The way you had to program and hbo 425 00:23:09,400 --> 00:23:12,639 Speaker 1: schedule was dependent upon these licenses because some of them 426 00:23:12,640 --> 00:23:15,200 Speaker 1: were like, Okay, we don't want you showing this this 427 00:23:15,320 --> 00:23:18,960 Speaker 1: movie before six pm. Well then they would have to 428 00:23:19,040 --> 00:23:21,720 Speaker 1: plan that out, you know, before six pm and also 429 00:23:21,840 --> 00:23:24,560 Speaker 1: after midnight. I'm sure that FCC regulations and stuff like 430 00:23:24,600 --> 00:23:28,600 Speaker 1: that would prevent some content from being shown during HBO 431 00:23:28,680 --> 00:23:32,600 Speaker 1: specifically police themselves and put they would not allow anything 432 00:23:32,680 --> 00:23:35,800 Speaker 1: that was R rated to go on before eight p m. 433 00:23:35,920 --> 00:23:38,200 Speaker 1: So it had to be after eight pm to to 434 00:23:38,680 --> 00:23:43,560 Speaker 1: go onto HBO. Uh. That was largely a self imposed rule, 435 00:23:43,720 --> 00:23:45,280 Speaker 1: and it was just an easy one for them to 436 00:23:45,280 --> 00:23:47,360 Speaker 1: to go with because they knew that that would be 437 00:23:47,720 --> 00:23:52,280 Speaker 1: something that would most likely fit their subscribers desires and 438 00:23:52,280 --> 00:23:55,040 Speaker 1: would at least mollify the kind of groups that would 439 00:23:55,040 --> 00:23:59,240 Speaker 1: have had complaints otherwise exactly most of them. Yes. So anyway, 440 00:23:59,280 --> 00:24:02,160 Speaker 1: those licenses put limiting factors on HBO how many movies 441 00:24:02,400 --> 00:24:04,080 Speaker 1: they would have access to it a given time, how 442 00:24:04,080 --> 00:24:06,760 Speaker 1: many how frequently they could show it. But then HBO 443 00:24:06,880 --> 00:24:10,800 Speaker 1: also had this model, this business model, where the idea was, 444 00:24:11,320 --> 00:24:15,080 Speaker 1: we're going to get this pool of movies. We're gonna 445 00:24:15,080 --> 00:24:17,720 Speaker 1: make a schedule where we're going to show these movies 446 00:24:17,760 --> 00:24:20,879 Speaker 1: at different times on different days, so that our customers 447 00:24:21,040 --> 00:24:24,160 Speaker 1: can look at the schedule and say, oh, the movie 448 00:24:24,200 --> 00:24:25,840 Speaker 1: I want to see is gonna be on at six 449 00:24:25,880 --> 00:24:28,800 Speaker 1: pm on Wednesday. I'll make sure to watch it on 450 00:24:28,840 --> 00:24:31,800 Speaker 1: Wednesday at six pm. But instead, what they found that 451 00:24:31,960 --> 00:24:33,840 Speaker 1: was that people were treating HBO like it was a 452 00:24:33,920 --> 00:24:38,640 Speaker 1: television channel. That's ridiculous. Well, I mean, you know, once again, 453 00:24:38,720 --> 00:24:42,080 Speaker 1: once BCRs entered the picture and they could just record something, yeah, 454 00:24:42,200 --> 00:24:43,919 Speaker 1: it didn't matter so much about when it was on, 455 00:24:43,960 --> 00:24:46,680 Speaker 1: but they and also yeah, someone would just turn on 456 00:24:46,720 --> 00:24:49,760 Speaker 1: the TV and just be like, oh, what's on right now? Okay, yeah, 457 00:24:49,840 --> 00:24:53,479 Speaker 1: oh it's beast Master again. Yeah. That was the problem 458 00:24:53,520 --> 00:24:56,080 Speaker 1: was that people were not treating it like the way 459 00:24:56,240 --> 00:25:01,600 Speaker 1: the company had thought of the service. And we we've theater, Yeah, exactly. 460 00:25:01,640 --> 00:25:04,320 Speaker 1: We've seen this happen in other industries, right, We've seen 461 00:25:04,320 --> 00:25:08,800 Speaker 1: it where someone creates a service, let's say Twitter, great example, 462 00:25:09,080 --> 00:25:11,359 Speaker 1: someone creates a service and they have in their mind 463 00:25:11,560 --> 00:25:13,280 Speaker 1: the way the service is going to be used by 464 00:25:13,280 --> 00:25:16,439 Speaker 1: the customers, and customers go, oh, this great thing for 465 00:25:16,520 --> 00:25:20,080 Speaker 1: this entirely different purpose. And so if you're a good company, 466 00:25:20,640 --> 00:25:23,359 Speaker 1: you move with the customers and you don't try and 467 00:25:23,440 --> 00:25:26,600 Speaker 1: force them into a model that they don't want, because 468 00:25:26,640 --> 00:25:30,800 Speaker 1: otherwise your your business suffers. So HBO started seeing, oh 469 00:25:30,880 --> 00:25:33,199 Speaker 1: we're gonna have to think of some other way to 470 00:25:33,320 --> 00:25:36,600 Speaker 1: change up our programming so that we don't have the same, 471 00:25:37,000 --> 00:25:40,120 Speaker 1: you know, list of movies showing so frequently, because we're 472 00:25:40,119 --> 00:25:42,560 Speaker 1: going to end up driving customers away. And we're already 473 00:25:42,600 --> 00:25:45,439 Speaker 1: having to deal with this churn issue and the saturation issue. 474 00:25:45,880 --> 00:25:49,720 Speaker 1: So all of these factors were going into HBO and 475 00:25:50,000 --> 00:25:52,920 Speaker 1: the executive's minds thinking, all right, we gotta we gotta 476 00:25:53,000 --> 00:25:58,080 Speaker 1: think of a new way of approaching content. Meanwhile, Michael Folks, 477 00:25:58,119 --> 00:26:00,239 Speaker 1: who we had talked about in the last episode, who 478 00:26:00,280 --> 00:26:04,679 Speaker 1: had come over from a talent agency and had joined HBO, 479 00:26:04,800 --> 00:26:08,080 Speaker 1: he becomes the head of HBO. He replaced Frank Beyondi, 480 00:26:08,200 --> 00:26:10,920 Speaker 1: who had pretty much been forced out. He had made 481 00:26:10,920 --> 00:26:15,480 Speaker 1: a really expensive licensing agreement with Columbia Pictures. Uh, there's 482 00:26:15,480 --> 00:26:18,359 Speaker 1: a little movie called Ghostbusters that nearly broke the bank 483 00:26:18,440 --> 00:26:21,760 Speaker 1: for HBO. We're talking like millions of dollars, like forty 484 00:26:21,800 --> 00:26:24,639 Speaker 1: million dollars just to have this one movie because they 485 00:26:24,680 --> 00:26:27,800 Speaker 1: had agreed beforehand, before knowing what this was going to be, 486 00:26:27,840 --> 00:26:30,480 Speaker 1: and there was no cap on how much they could spend. 487 00:26:30,520 --> 00:26:33,640 Speaker 1: So that deal pretty much melt the in for Beyondi. Yeah, 488 00:26:33,680 --> 00:26:35,119 Speaker 1: well that that was that was the first place that 489 00:26:35,160 --> 00:26:38,159 Speaker 1: I saw Ghostbusters. So wow, I saw it in the 490 00:26:38,160 --> 00:26:43,000 Speaker 1: theater opening day the librarians. What are I was? Two? 491 00:26:45,040 --> 00:26:47,639 Speaker 1: Moving on, We're going to take a quick break while 492 00:26:47,760 --> 00:26:51,280 Speaker 1: I get my walker and make sure I go out 493 00:26:51,320 --> 00:26:54,040 Speaker 1: and get some insure to drink, and then when we 494 00:26:54,080 --> 00:26:57,400 Speaker 1: come back, we'll talk more about HBO. Let's though, take 495 00:26:57,440 --> 00:27:01,400 Speaker 1: this moment to thank our sponsor. All right, We're up 496 00:27:01,440 --> 00:27:05,720 Speaker 1: to nineteen five, and that's when HBO decided to launch 497 00:27:05,760 --> 00:27:09,800 Speaker 1: a big summer advertising campaign. Now, they they saw that 498 00:27:09,880 --> 00:27:12,720 Speaker 1: the wall had hit. They saw this saturation in churn issue, 499 00:27:13,080 --> 00:27:16,120 Speaker 1: they saw the exclusivity issue, and they thought, how can 500 00:27:16,160 --> 00:27:18,960 Speaker 1: we attract more customers so that we can continue to grow? 501 00:27:19,440 --> 00:27:21,960 Speaker 1: And they decided that they would really concentrate in an 502 00:27:21,960 --> 00:27:25,399 Speaker 1: advertising campaign that spanned the summer of n and they 503 00:27:25,400 --> 00:27:27,320 Speaker 1: would repeat this a couple of times. Oh yeah, yeah, 504 00:27:27,320 --> 00:27:29,720 Speaker 1: And why the summer, you ask, Summer is a when 505 00:27:29,800 --> 00:27:32,560 Speaker 1: kids are out of school and parents need something to 506 00:27:32,600 --> 00:27:36,399 Speaker 1: do with these suddenly free tiny humans. Yeah, most of 507 00:27:36,480 --> 00:27:39,520 Speaker 1: us have to continue to work in the summer months. 508 00:27:39,600 --> 00:27:41,960 Speaker 1: And so how do you keep the tiny humans from 509 00:27:42,040 --> 00:27:46,520 Speaker 1: rising up against their masters and enslaving us? All good HBO. Furthermore, 510 00:27:46,640 --> 00:27:50,000 Speaker 1: as most of us know, summer is when many television 511 00:27:50,000 --> 00:27:52,600 Speaker 1: shows are in reruns. All of the all of the 512 00:27:52,640 --> 00:27:56,160 Speaker 1: really big primary prime time sort of things are broken 513 00:27:56,400 --> 00:27:59,919 Speaker 1: for the summer. Yeah, broadcast television is tends to be 514 00:28:00,280 --> 00:28:03,760 Speaker 1: pretty pretty barren over the summer, like you're either watching 515 00:28:03,800 --> 00:28:06,720 Speaker 1: reruns or especially just don't care about especially back in 516 00:28:06,760 --> 00:28:08,439 Speaker 1: those days. These days, it's changing a lot, and it's 517 00:28:08,440 --> 00:28:10,159 Speaker 1: a little bit it's a little bit now where you 518 00:28:10,240 --> 00:28:14,480 Speaker 1: can get interesting programming. Yeah, especially now that you have 519 00:28:14,600 --> 00:28:20,359 Speaker 1: shows that are dividing their seasons up into season breaking bad. 520 00:28:20,560 --> 00:28:24,440 Speaker 1: You don't don't perpetuate the breaking bad problem. I mean, 521 00:28:24,480 --> 00:28:27,439 Speaker 1: breaking bad great show, but you know, splitting up your 522 00:28:27,440 --> 00:28:32,760 Speaker 1: seasons bad, breaking bad bad. All right. But anyway, Yeah, 523 00:28:32,880 --> 00:28:36,280 Speaker 1: HBO decided, hey, we can take this opportunity to really 524 00:28:36,480 --> 00:28:39,760 Speaker 1: grab this this audience that doesn't yet subscribe to HBO. 525 00:28:39,880 --> 00:28:42,440 Speaker 1: So what they did was they sent ads through direct 526 00:28:42,480 --> 00:28:45,960 Speaker 1: mail and they also did telemarketing. They called people, cold 527 00:28:46,040 --> 00:28:49,920 Speaker 1: calling people to convince them to sign up, and as 528 00:28:49,960 --> 00:28:54,440 Speaker 1: irritating as it was, it worked. Yeah. They sent six 529 00:28:54,560 --> 00:29:00,280 Speaker 1: hundred forty million ads to folks between six d pretty 530 00:29:00,320 --> 00:29:04,760 Speaker 1: million twice the population of the United States. They also 531 00:29:04,800 --> 00:29:08,800 Speaker 1: did start investing more in original programming. Yes, um and 532 00:29:08,800 --> 00:29:10,880 Speaker 1: and you know, sports was something that they had been 533 00:29:10,920 --> 00:29:12,800 Speaker 1: doing since the beginning. Yeah, that was one of the 534 00:29:13,120 --> 00:29:15,560 Speaker 1: you remember the two things you could watch on HBO 535 00:29:15,600 --> 00:29:19,200 Speaker 1: when it premiered was a movie uh that that was 536 00:29:19,240 --> 00:29:23,160 Speaker 1: about logging and a hockey game. So sports had always 537 00:29:23,160 --> 00:29:26,120 Speaker 1: been part of HBO. Also, stand up comedy specials had 538 00:29:26,120 --> 00:29:28,760 Speaker 1: been a part of HBO since the early days. Oh yeah, yeah, 539 00:29:28,760 --> 00:29:31,760 Speaker 1: those really great old rap and Williams or Richard pryor special. 540 00:29:31,880 --> 00:29:33,880 Speaker 1: Steve Martin had a good one too. Yeah. You had 541 00:29:33,880 --> 00:29:36,520 Speaker 1: a bunch of people who were the the kind of 542 00:29:36,640 --> 00:29:40,280 Speaker 1: the loudest voices of comedy in the seventies and eighties. 543 00:29:40,320 --> 00:29:43,960 Speaker 1: George Carlin another one. Some amazing comedians who would get 544 00:29:43,960 --> 00:29:46,520 Speaker 1: their HBO special. And even to this day, you'll hear 545 00:29:46,720 --> 00:29:49,680 Speaker 1: comedians talk about, you know, feeling like they made it 546 00:29:49,720 --> 00:29:52,120 Speaker 1: when they got an HBO special like that. That was 547 00:29:52,160 --> 00:29:54,400 Speaker 1: like a mark of success. You know, that's when you 548 00:29:54,440 --> 00:29:57,560 Speaker 1: know you've you've arrived. They continued to do that, so 549 00:29:57,880 --> 00:30:00,920 Speaker 1: stand up comedy also big. They also ended up backing 550 00:30:00,960 --> 00:30:05,080 Speaker 1: several documentary series. They ended up creating several series, including 551 00:30:05,080 --> 00:30:09,120 Speaker 1: a brand called America Undercover. There's several documentaries in that series, 552 00:30:09,600 --> 00:30:13,320 Speaker 1: and that helped to differentiate them again more from the 553 00:30:13,360 --> 00:30:16,479 Speaker 1: showtimes in the world. Now, keep in mind Showtime at 554 00:30:16,480 --> 00:30:19,240 Speaker 1: this point not really getting into original programming that much, 555 00:30:20,000 --> 00:30:22,520 Speaker 1: and they were still very much dependent upon the uncut, 556 00:30:22,600 --> 00:30:26,280 Speaker 1: uncensored versions of movies. HBO was trying to kind of 557 00:30:26,520 --> 00:30:29,520 Speaker 1: break away from that a little bit, while still having 558 00:30:29,560 --> 00:30:32,840 Speaker 1: movies on the channel, but trying to differentiate themselves by 559 00:30:32,880 --> 00:30:36,120 Speaker 1: adding variety that you could not get anywhere else. A right, right, 560 00:30:36,160 --> 00:30:38,680 Speaker 1: it's a little bit if you remember from our cable 561 00:30:38,840 --> 00:30:42,520 Speaker 1: provider and streaming media discussion, or I mean, if you 562 00:30:42,560 --> 00:30:45,640 Speaker 1: pay attention to the Internet these days, a little bit 563 00:30:45,680 --> 00:30:48,120 Speaker 1: of what what Netflix is doing to kind of try 564 00:30:48,160 --> 00:30:51,680 Speaker 1: to move itself forward in front of channels like HBO. 565 00:30:51,720 --> 00:30:54,040 Speaker 1: In fact, if HBO had not done this, we would 566 00:30:54,040 --> 00:30:57,000 Speaker 1: not have a Netflix, and we certainly wouldn't have a 567 00:30:57,040 --> 00:30:59,640 Speaker 1: Netflix that's making its own content. Same thing with Hulu, 568 00:30:59,680 --> 00:31:02,760 Speaker 1: same thing with Amazon. The reason why they're able to 569 00:31:02,840 --> 00:31:05,920 Speaker 1: make their own content, why that's a viable choice, is 570 00:31:05,960 --> 00:31:08,760 Speaker 1: because HBO tried it and made it work. Now, not 571 00:31:08,880 --> 00:31:12,040 Speaker 1: everything HBO did with the independent stuff that they did. 572 00:31:12,080 --> 00:31:14,280 Speaker 1: The original programming stuff worked, and we'll talk a lot 573 00:31:14,320 --> 00:31:18,080 Speaker 1: about some of both the successes and the failures. Um. 574 00:31:18,160 --> 00:31:21,680 Speaker 1: Not everything caught on. However, they also partnered at that 575 00:31:21,760 --> 00:31:25,040 Speaker 1: time with a company called Thorne E m I, which 576 00:31:25,080 --> 00:31:28,520 Speaker 1: was an independent film producer and video distributor. So their 577 00:31:28,600 --> 00:31:32,120 Speaker 1: main business model was to partner with other movie studios 578 00:31:32,120 --> 00:31:35,280 Speaker 1: that did not have a home video distribution market. So 579 00:31:35,720 --> 00:31:38,600 Speaker 1: some of the big ones did they they had they 580 00:31:38,640 --> 00:31:40,920 Speaker 1: had it all in place where either they had their 581 00:31:40,920 --> 00:31:44,440 Speaker 1: own production company or distribution company, or they partnered with 582 00:31:44,480 --> 00:31:47,560 Speaker 1: someone already. Thorny and I would would partner with lots 583 00:31:47,600 --> 00:31:50,440 Speaker 1: of smaller, smaller distribution companies, so they ended up getting 584 00:31:50,440 --> 00:31:53,640 Speaker 1: a lot of um we all those cheap action movies, 585 00:31:53,800 --> 00:31:56,680 Speaker 1: you know, the ones that started Internet, Darling, Chuck Norris, 586 00:31:56,720 --> 00:32:01,160 Speaker 1: those were big ones. But uh. The following year six 587 00:32:01,360 --> 00:32:05,080 Speaker 1: Cannon Pictures bought out thorn em I's interest, so HBO 588 00:32:05,120 --> 00:32:08,800 Speaker 1: and thorny em I had um HBO and thorny em 589 00:32:08,840 --> 00:32:11,680 Speaker 1: I had partnered together. Cannon Pictures comes in buys out 590 00:32:11,680 --> 00:32:14,080 Speaker 1: thorn em I, but still partners with HBO and it 591 00:32:14,120 --> 00:32:17,960 Speaker 1: becomes HBO slash Cannon Video and again most of the 592 00:32:18,040 --> 00:32:22,840 Speaker 1: movies low budget action films, awesome movies, not taking anything 593 00:32:22,840 --> 00:32:27,440 Speaker 1: away from him. By seven, HBO Cannon ends up being 594 00:32:27,440 --> 00:32:31,080 Speaker 1: renamed HBO Video. Short time later, it changes names again 595 00:32:31,280 --> 00:32:36,400 Speaker 1: to HBO Entertainment, and uh, they had a few successes, 596 00:32:36,440 --> 00:32:39,520 Speaker 1: but really it was touch and go for a while. 597 00:32:39,640 --> 00:32:43,440 Speaker 1: It wouldn't be until HBO original programming really took off 598 00:32:43,800 --> 00:32:47,640 Speaker 1: in the nineties when HBO Entertainment had it made because 599 00:32:47,680 --> 00:32:52,080 Speaker 1: now they became the distribution for HBO originals that everybody 600 00:32:52,120 --> 00:32:53,880 Speaker 1: wanted to have, all right, but at the time it 601 00:32:53,920 --> 00:32:57,800 Speaker 1: was really just scraping by moving on to Night six. 602 00:32:57,840 --> 00:33:01,760 Speaker 1: That's when HBO established hbo Ocase, which was an actual 603 00:33:01,800 --> 00:33:04,880 Speaker 1: production company. So they had already moved into distribution, and 604 00:33:04,920 --> 00:33:07,760 Speaker 1: they had a production company over on the West Coast 605 00:33:07,800 --> 00:33:11,120 Speaker 1: in Los Angeles called HBO Pictures, but now they wanted 606 00:33:11,120 --> 00:33:13,680 Speaker 1: to create another production company on the East coast, so 607 00:33:13,760 --> 00:33:16,200 Speaker 1: this one was based in New York and the idea 608 00:33:16,280 --> 00:33:19,880 Speaker 1: was to make grittier, more you know, kind of realistic 609 00:33:20,240 --> 00:33:24,960 Speaker 1: or hard hitting movies than HBO Pictures was known for. 610 00:33:25,160 --> 00:33:28,400 Speaker 1: So their first picture was about a KGB agent who 611 00:33:28,480 --> 00:33:30,800 Speaker 1: was involved in a big CIA operation. This was actually 612 00:33:30,800 --> 00:33:35,480 Speaker 1: a true story about Uri Nasinko, so they they were 613 00:33:35,640 --> 00:33:38,960 Speaker 1: going kind of this this hard, gritty route, and in 614 00:33:39,040 --> 00:33:42,560 Speaker 1: general people said it felt more like HBO, whereas the 615 00:33:42,560 --> 00:33:46,560 Speaker 1: stuff from HBO Pictures a little more you know, glossy 616 00:33:46,640 --> 00:33:50,920 Speaker 1: and glitzy certainly had bigger budgets, had access to bigger names, 617 00:33:51,000 --> 00:33:56,360 Speaker 1: so you saw more movie stars in HBO Pictures productions, 618 00:33:56,360 --> 00:33:59,080 Speaker 1: but the HBO Showcase would be the kind of more 619 00:33:59,120 --> 00:34:02,800 Speaker 1: down to earth stuff. So both of these would eventually 620 00:34:03,080 --> 00:34:07,840 Speaker 1: merge together and become HBO Films, and Colin Callender, who 621 00:34:07,880 --> 00:34:10,640 Speaker 1: had been the head of HBO Showcase, became the head 622 00:34:10,680 --> 00:34:13,960 Speaker 1: of this whole department. I'm sure there were some grumblings 623 00:34:13,960 --> 00:34:17,680 Speaker 1: on both sides. I'm sure the the the Showcase folks 624 00:34:17,719 --> 00:34:20,719 Speaker 1: were thinking, you know, they get all the money and 625 00:34:20,760 --> 00:34:23,320 Speaker 1: they get they get access to all that talent, whereas 626 00:34:23,360 --> 00:34:26,759 Speaker 1: the Pictures folks were probably thinking, they have this crazy reputation, 627 00:34:26,840 --> 00:34:29,319 Speaker 1: which we should have because look at what we're doing. 628 00:34:29,360 --> 00:34:32,279 Speaker 1: So so everyone get together and play nice. Yeah. Uh. 629 00:34:32,480 --> 00:34:35,600 Speaker 1: Fortunately they were separated by the rest of the United States, 630 00:34:35,640 --> 00:34:37,319 Speaker 1: with one being in l a and the other being 631 00:34:37,320 --> 00:34:39,359 Speaker 1: in New York, so I think they could they were 632 00:34:39,400 --> 00:34:41,960 Speaker 1: insulated enough where it wasn't too much of a problem. 633 00:34:42,000 --> 00:34:46,640 Speaker 1: Also in now, this is another big moment in HBO 634 00:34:46,760 --> 00:34:51,560 Speaker 1: history because it established a practice that ended up becoming 635 00:34:51,600 --> 00:34:55,040 Speaker 1: an industry wide standard. It's another reason why we really 636 00:34:55,040 --> 00:34:58,439 Speaker 1: wanted to talk about HBO at length, because so many 637 00:34:58,480 --> 00:35:02,360 Speaker 1: of the things they did influenced multiple industries. In this case, 638 00:35:02,800 --> 00:35:07,719 Speaker 1: they began to scramble or encode signals full time. For 639 00:35:07,840 --> 00:35:10,600 Speaker 1: those satellite signals. Now, if you listen to the first episode, 640 00:35:10,600 --> 00:35:14,000 Speaker 1: you learned about HBO using up links to send a 641 00:35:14,040 --> 00:35:17,279 Speaker 1: signal up to a satellite, which used transponders leased by 642 00:35:17,440 --> 00:35:20,000 Speaker 1: HBO to amplify the signal send it back down to 643 00:35:20,080 --> 00:35:23,120 Speaker 1: down links across the nation to cable providers. Because it 644 00:35:23,160 --> 00:35:26,200 Speaker 1: spread out over the entirety of North America. And at 645 00:35:26,239 --> 00:35:29,200 Speaker 1: this point, the cost of purchasing a satellite dish for 646 00:35:29,239 --> 00:35:32,480 Speaker 1: yourself head lowered to the point where where common families 647 00:35:32,520 --> 00:35:34,319 Speaker 1: could purchase one if they wanted, Yeah, if they if 648 00:35:34,360 --> 00:35:36,400 Speaker 1: they saved up. I mean even back when it was 649 00:35:36,440 --> 00:35:38,680 Speaker 1: still tens of thousands of dollars, you had a few 650 00:35:38,719 --> 00:35:42,000 Speaker 1: crazy people with lots of money buying these things. Because 651 00:35:42,360 --> 00:35:45,400 Speaker 1: the signals weren't scrambled, the signals were clear. So so 652 00:35:45,480 --> 00:35:47,440 Speaker 1: once you bought in what I mean for for the 653 00:35:47,440 --> 00:35:50,279 Speaker 1: purchase price of that satellite dish, you could watch whatever 654 00:35:50,320 --> 00:35:54,200 Speaker 1: you wanted to absolutely free. And so pay TV stations 655 00:35:54,239 --> 00:35:56,400 Speaker 1: didn't like this because you didn't have to subscribe to 656 00:35:56,520 --> 00:35:59,000 Speaker 1: cable at all. Cable companies didn't like it because you 657 00:35:59,040 --> 00:36:01,239 Speaker 1: didn't have to subscribe to cable at all. You just 658 00:36:01,320 --> 00:36:04,520 Speaker 1: had this dish, which at the time was enormous. Uh. 659 00:36:04,640 --> 00:36:08,080 Speaker 1: This was before they had developed the the dishes that 660 00:36:08,239 --> 00:36:10,520 Speaker 1: are more common these days. This is when if you 661 00:36:10,560 --> 00:36:13,000 Speaker 1: remember back in the eighties, the enormous satellite dishes that 662 00:36:13,080 --> 00:36:14,600 Speaker 1: might be out in front of someone's yard or in 663 00:36:14,640 --> 00:36:16,680 Speaker 1: the backyard. That's what I'm talking about, the big like 664 00:36:16,800 --> 00:36:20,480 Speaker 1: nine footers. So you're able to get these signals clear. 665 00:36:20,600 --> 00:36:23,600 Speaker 1: And not only that, broadcast television hated it. And you 666 00:36:23,680 --> 00:36:25,880 Speaker 1: might think, well, why did broadcast television hate it? You 667 00:36:25,880 --> 00:36:29,520 Speaker 1: could get those shows for free using an antenna. Well, 668 00:36:29,560 --> 00:36:32,160 Speaker 1: it's because those shows aren't really free. The reason why 669 00:36:32,160 --> 00:36:35,320 Speaker 1: those shows are are possible at almost because their ads 670 00:36:35,320 --> 00:36:41,080 Speaker 1: supported right advertisers by advertising time on those shows, and 671 00:36:41,160 --> 00:36:44,680 Speaker 1: that money goes to the production companies. They are more 672 00:36:44,760 --> 00:36:47,719 Speaker 1: steps in here, but in general, the production companies are 673 00:36:47,760 --> 00:36:50,920 Speaker 1: able to make shows because the money made through advertising. Well, 674 00:36:51,000 --> 00:36:53,480 Speaker 1: if you're using a satellite to pull down the raw feed, 675 00:36:53,680 --> 00:36:55,840 Speaker 1: you're getting the raw feed, you're getting what's called the 676 00:36:55,880 --> 00:36:58,759 Speaker 1: back haul feed, which is before they put any commercials 677 00:36:58,800 --> 00:37:02,480 Speaker 1: into the content. So you were getting commercial free content 678 00:37:02,600 --> 00:37:06,320 Speaker 1: from all the different providers, something that broadcast and cable 679 00:37:06,360 --> 00:37:09,840 Speaker 1: stations and cable providers all hated. So how do you 680 00:37:09,840 --> 00:37:12,480 Speaker 1: fix this problem? Well, what HBO decided to do was 681 00:37:12,520 --> 00:37:16,960 Speaker 1: to invest in, uh this encoding and scrambling technology. They 682 00:37:17,520 --> 00:37:20,560 Speaker 1: ended up going with General Instruments video cipher to to 683 00:37:20,760 --> 00:37:24,239 Speaker 1: encrypt the audio and video signals. Once they've done that, 684 00:37:24,320 --> 00:37:27,280 Speaker 1: you'd have to have a decryption box on the private 685 00:37:27,400 --> 00:37:30,760 Speaker 1: end in order to decrypt the signals. Right, So cable 686 00:37:30,840 --> 00:37:34,239 Speaker 1: companies had these D scramblers, Right, they can just descramble it, 687 00:37:34,239 --> 00:37:37,040 Speaker 1: and they had an agreement with HBO. Originally it was 688 00:37:37,120 --> 00:37:40,560 Speaker 1: just HBO, but other other channels would follow suit. So 689 00:37:40,719 --> 00:37:44,080 Speaker 1: HBO ended up, like I said, creating this industry standard approach. 690 00:37:44,480 --> 00:37:47,520 Speaker 1: So the cable providers would all have these D scramblers, 691 00:37:47,520 --> 00:37:50,040 Speaker 1: and as a private citizen, you could get a D scrambler, 692 00:37:50,400 --> 00:37:53,920 Speaker 1: but uh, it wouldn't necessarily work. You'd have to pay 693 00:37:54,160 --> 00:37:56,200 Speaker 1: HBO to have access. You could actually go out and 694 00:37:56,239 --> 00:38:00,680 Speaker 1: buy chips that would decrypt things for you, but often 695 00:38:00,719 --> 00:38:02,879 Speaker 1: these chips would only be good for about a month, 696 00:38:03,280 --> 00:38:05,600 Speaker 1: and what would happen is that the provider on the 697 00:38:05,600 --> 00:38:09,399 Speaker 1: other end would see that someone usually it's some fake 698 00:38:09,480 --> 00:38:14,319 Speaker 1: address that's been made out to a customer has not 699 00:38:14,440 --> 00:38:16,840 Speaker 1: paid their bill, and so they cut off the service. 700 00:38:16,840 --> 00:38:18,760 Speaker 1: So for a month you have service, and then suddenly 701 00:38:18,800 --> 00:38:21,640 Speaker 1: you don't. So people kept trying to find ways to 702 00:38:21,640 --> 00:38:25,000 Speaker 1: get around this, but it meant that for the most part, 703 00:38:25,080 --> 00:38:27,319 Speaker 1: it was much harder to pirate a signal. Now, this 704 00:38:27,480 --> 00:38:32,480 Speaker 1: made satellite dish owners very, very angry. They felt entitled 705 00:38:32,520 --> 00:38:35,120 Speaker 1: to the stuff they were stealing because, in their minds, 706 00:38:35,120 --> 00:38:37,839 Speaker 1: they had paid thousands of dollars for a salar dish, 707 00:38:38,120 --> 00:38:41,000 Speaker 1: therefore they should have access to all this content, despite 708 00:38:41,000 --> 00:38:43,680 Speaker 1: the fact that all the content providers are saying, yeah, see, 709 00:38:43,840 --> 00:38:47,080 Speaker 1: the money you spent didn't go to help pay for 710 00:38:47,120 --> 00:38:50,600 Speaker 1: the actual content, and unless we get paid for the 711 00:38:50,640 --> 00:38:54,560 Speaker 1: content we make, we can't make it. So you're actually 712 00:38:54,680 --> 00:38:58,560 Speaker 1: talking about a behavior that ultimately will completely destroy the 713 00:38:58,600 --> 00:39:02,200 Speaker 1: business that you want to to enjoy. You want this content, 714 00:39:02,360 --> 00:39:04,879 Speaker 1: you want to be able to watch stuff, but if 715 00:39:04,960 --> 00:39:07,080 Speaker 1: we're not getting money for it, we can't make the 716 00:39:07,120 --> 00:39:10,080 Speaker 1: stuff you want to watch. But the satellite provide. Satellite 717 00:39:10,120 --> 00:39:15,359 Speaker 1: owners said, I want my free HBO. So Jonathan has 718 00:39:15,360 --> 00:39:18,359 Speaker 1: some opinions. I don't side with the pirates on this one. 719 00:39:18,800 --> 00:39:22,319 Speaker 1: To be honest, I mean I understand. I understand the 720 00:39:22,400 --> 00:39:25,040 Speaker 1: other arguments, which we'll get into when we talk about streaming. 721 00:39:25,680 --> 00:39:28,400 Speaker 1: I'll you know, it's not that I don't feel empathy 722 00:39:28,440 --> 00:39:31,040 Speaker 1: for folks who want to have access to content. It's 723 00:39:31,080 --> 00:39:33,600 Speaker 1: just that if you had the choice of either spending 724 00:39:34,040 --> 00:39:36,280 Speaker 1: thousands of dollars for a satellite dish and then stealing 725 00:39:36,320 --> 00:39:40,080 Speaker 1: everything or the just sub that that is a different issue, 726 00:39:40,200 --> 00:39:42,719 Speaker 1: and it's a little bit on the silly end um. 727 00:39:42,760 --> 00:39:47,440 Speaker 1: But meanwhile, also in six uh, Jeff Bukes became HBO's 728 00:39:47,520 --> 00:39:51,439 Speaker 1: chief financial officer. He wouldn't be finished rising the ranks 729 00:39:51,440 --> 00:39:53,200 Speaker 1: because if you listen to our last episode, we kind 730 00:39:53,200 --> 00:39:57,400 Speaker 1: of gave it away. Seven HBO launches festival. This is 731 00:39:57,400 --> 00:40:00,520 Speaker 1: gonna sound like it's a like it's a deja vu 732 00:40:00,719 --> 00:40:03,720 Speaker 1: all over again. All right, Right, Remember take two. Yeah, 733 00:40:03,800 --> 00:40:07,480 Speaker 1: that was the idea of creating a kid friendly network 734 00:40:07,600 --> 00:40:10,960 Speaker 1: that was lower priced, so people who weren't either willing 735 00:40:11,000 --> 00:40:14,040 Speaker 1: to pay the full subscription price for HBO or objected 736 00:40:14,080 --> 00:40:17,160 Speaker 1: to the content would have an alternative. It also did 737 00:40:17,200 --> 00:40:19,799 Speaker 1: not work. Yeah, apparently they didn't learn anything from Take 738 00:40:19,840 --> 00:40:22,239 Speaker 1: two because Festival, to me, sounds like it was the 739 00:40:22,320 --> 00:40:24,960 Speaker 1: same thing, exactly the same thing. Yeah, it would it 740 00:40:24,960 --> 00:40:29,040 Speaker 1: would find up getting canceled entirely than a year. Yeah. 741 00:40:29,080 --> 00:40:31,879 Speaker 1: The problem was that they were trying to target two 742 00:40:31,880 --> 00:40:36,240 Speaker 1: different populations. They wanted to target the conservative older people 743 00:40:36,239 --> 00:40:39,040 Speaker 1: who didn't want all that filth on their TV, and 744 00:40:39,080 --> 00:40:42,080 Speaker 1: they wanted to target families with young children who wanted 745 00:40:42,120 --> 00:40:45,040 Speaker 1: to have kid friendly programming. But the problem was all 746 00:40:45,080 --> 00:40:47,279 Speaker 1: the older conservatives said, why do you have all this 747 00:40:47,680 --> 00:40:50,879 Speaker 1: children programming on my station? I don't want any of this. 748 00:40:50,880 --> 00:40:53,320 Speaker 1: This is not interesting to me. And all the families 749 00:40:53,320 --> 00:40:55,799 Speaker 1: were saying, I got this channel so that I could 750 00:40:55,800 --> 00:40:58,000 Speaker 1: watch stuff and my kids could watch stuff. But when 751 00:40:58,000 --> 00:40:59,680 Speaker 1: my kids have gone to bed, the only stuff you 752 00:40:59,760 --> 00:41:02,440 Speaker 1: have on is on Golden PONDT times in a row. 753 00:41:03,239 --> 00:41:07,880 Speaker 1: I don't care about that. So neither target audience was satisfied. 754 00:41:08,360 --> 00:41:11,640 Speaker 1: So it's the lesson here is, if you want to 755 00:41:11,640 --> 00:41:17,799 Speaker 1: target two very different audiences, splitting the difference hardly ever works. Yes. 756 00:41:18,360 --> 00:41:22,000 Speaker 1: Um the next year though in something with kids did 757 00:41:22,040 --> 00:41:24,920 Speaker 1: work out. Yes, The Kids in the Hall in fact 758 00:41:25,120 --> 00:41:29,239 Speaker 1: premiered on HBO. Canadian sketch comedy Troupe Brilliant, one of 759 00:41:29,280 --> 00:41:32,560 Speaker 1: my favorites. Seen him live, good stuff. Yeah, yeah, I've 760 00:41:32,560 --> 00:41:34,600 Speaker 1: only seen him live once. My wife seen him live twice. 761 00:41:35,080 --> 00:41:37,279 Speaker 1: She likes to hold that over me, but yeah, no, 762 00:41:37,520 --> 00:41:40,400 Speaker 1: fantastic one of the one of the moves where HBO 763 00:41:40,400 --> 00:41:43,759 Speaker 1: Original programming really started to break away. And we've got 764 00:41:43,760 --> 00:41:47,440 Speaker 1: a lot more to say about HBO Original programming, so 765 00:41:47,520 --> 00:41:50,680 Speaker 1: much so that we've done another episode of HBO coming up. 766 00:41:51,000 --> 00:41:53,560 Speaker 1: So here's the thing, guys, if you have any ideas 767 00:41:53,600 --> 00:41:57,320 Speaker 1: for episodes that we should definitely take on in the future, 768 00:41:57,800 --> 00:42:00,160 Speaker 1: let us know. Send us an email. All address is 769 00:42:00,239 --> 00:42:03,840 Speaker 1: tech Stuff at Discovery dot com, or drop us a 770 00:42:03,880 --> 00:42:07,120 Speaker 1: line on Facebook, whether or Tumbler or handle it. All 771 00:42:07,160 --> 00:42:10,080 Speaker 1: three is tech Stuff hs W and we will talk 772 00:42:10,080 --> 00:42:16,239 Speaker 1: to you again really soon for more on this and 773 00:42:16,320 --> 00:42:18,879 Speaker 1: thousands of other topics. Because it has staff works dot 774 00:42:18,880 --> 00:42:28,800 Speaker 1: Com