WEBVTT - The HBO Story: Part Two 0:00:03.400 --> 0:00:06.440 Get in touch with technology with tech Stuff from how 0:00:06.480 --> 0:00:13.440 Stuff Works dot com. Say that everyone, and welcome to 0:00:13.520 --> 0:00:17.000 tex Stuff. I'm Jovin Strickland and I and we are 0:00:17.079 --> 0:00:20.840 continuing our epic adventure into the story of HBO. This 0:00:20.920 --> 0:00:23.520 is part two. If you haven't listened to part one, 0:00:23.600 --> 0:00:25.840 I highly recommend you do that because otherwise you're just 0:00:25.840 --> 0:00:28.360 gonna be totally lost. And because it's probably you've never 0:00:28.360 --> 0:00:30.200 heard of HBO before. No, but no, but we've covered 0:00:30.240 --> 0:00:33.080 a lot of really is interesting territory. And we've only 0:00:33.120 --> 0:00:36.160 been with the company for eight years since its inceptions. 0:00:36.159 --> 0:00:38.280 That is how much material we had. We just moved 0:00:38.320 --> 0:00:41.760 up to nineteen eighty and HBO launched in nineteen seventy two. 0:00:41.800 --> 0:00:45.120 That just tells you how dense the history of this 0:00:45.320 --> 0:00:49.559 cable station has been. And you know, the reason why 0:00:49.600 --> 0:00:52.080 we're taking so much time. You might think all that 0:00:52.240 --> 0:00:54.600 is that just filler. No, the reason we're taking so 0:00:54.680 --> 0:00:58.480 much time is because HBO as an entity, has heavily 0:00:58.560 --> 0:01:03.200 influenced what cable television is and what entertainment delivery services 0:01:03.240 --> 0:01:06.360 are in general. If it hadn't been for HBO, our 0:01:06.440 --> 0:01:11.160 landscape would be dramatically different today. So that's why we're 0:01:11.160 --> 0:01:14.280 doing it. In fact, think about it. Without HBO, you 0:01:14.319 --> 0:01:19.520 don't have cable companies, cable system operators pushing cable copper 0:01:19.600 --> 0:01:23.280 cable into cities anywhere near as quickly. Right, you might 0:01:23.360 --> 0:01:25.120 not have ever seen it happen, or it might have 0:01:25.160 --> 0:01:27.920 taken a decade longer, which means you would not even 0:01:27.959 --> 0:01:31.600 have the infrastructure that the Internet relies on today. For 0:01:31.800 --> 0:01:35.600 high speed Internet, we'd be using telephone lines. Still. Yeah, 0:01:35.680 --> 0:01:39.120 you might furthermore not have had people adopt as quickly 0:01:39.160 --> 0:01:44.520 the idea of using satellites to beam information, uh television 0:01:44.520 --> 0:01:50.040 information out to many spread networks exactly. So, like we said, 0:01:50.160 --> 0:01:53.280 landscape very different without HBO. Whether you love it or 0:01:53.320 --> 0:01:56.600 hate it, it's a large part of why the world 0:01:56.920 --> 0:01:59.720 is as far as the cable world and entertainment worlds, 0:01:59.720 --> 0:02:02.560 why things are the way they are so so um. 0:02:02.600 --> 0:02:07.080 A little tiny bit of backstory, very tiny. HBO owned 0:02:07.120 --> 0:02:11.679 by Time, Yes, Time Incorporated, not not Time, the the 0:02:11.720 --> 0:02:15.600 physical entity like the actual not Father Time, not the 0:02:15.600 --> 0:02:21.480 progression of changes throughout, not the fourth dimension. Time Incorporated, 0:02:21.520 --> 0:02:24.600 the company that owned Time magazine or still does Time Magazine, 0:02:24.600 --> 0:02:28.840 Fortune Magazine, Sports Illustrated etcetera, etcetera. Correct, So in Time 0:02:28.960 --> 0:02:32.640 launched a second pay TV channel called Cinemax, primarily as 0:02:32.639 --> 0:02:37.680 a competitor to the less expensive Showtime. Yes, so there 0:02:37.680 --> 0:02:39.919 were a couple of different ways to compete against Showtime. 0:02:39.960 --> 0:02:42.800 One was, let's try and grab as much exclusive content 0:02:42.840 --> 0:02:45.760 as we possibly can that Showtime can't have, and thus 0:02:45.760 --> 0:02:48.240 people will say, hey, we want HBO because they have 0:02:48.400 --> 0:02:52.800 these movies and Showtime doesn't. However, that's really expensive. Another 0:02:52.840 --> 0:02:56.400 approach was to create a second page television network, Cinemax, 0:02:56.760 --> 0:02:59.400 and to run a lot of the same programming that 0:02:59.560 --> 0:03:03.600 HBO itself already had, and maybe concentrate on some genres 0:03:03.639 --> 0:03:09.080 that didn't necessarily fit into HBO's corporate appearances, like they're there, 0:03:08.800 --> 0:03:12.080 their their culture, and furthermore, that happened to be a 0:03:12.120 --> 0:03:15.040 lot less expensive to purchase. Like I like cult films 0:03:15.120 --> 0:03:18.280 and kind of obscure noir stuff. One of my favorite 0:03:18.280 --> 0:03:21.440 cult films of all time I first saw on Cinemax. 0:03:21.520 --> 0:03:23.680 I had heard about it, but I've never seen it. 0:03:24.040 --> 0:03:27.919 And that film, of course, is the brilliant movie Shock Treatment. 0:03:28.400 --> 0:03:31.400 The not a sequel, not a prequel, but an equal 0:03:31.560 --> 0:03:34.000 to the Rocky Horror Picture Show and that's how I 0:03:34.040 --> 0:03:36.440 saw it the first time I ever experienced it. It 0:03:36.480 --> 0:03:39.640 was shown on Cinemax because it fit into that realm 0:03:39.760 --> 0:03:42.560 of the Cinemax movie where it were there were some 0:03:42.640 --> 0:03:45.400 of these kind of cult, classic, schlocky, sort of cheap 0:03:45.480 --> 0:03:49.680 movies to license, but they still had their audience. So 0:03:50.600 --> 0:03:55.440 this approach did not come without criticism, specifically from Viacom, 0:03:55.480 --> 0:03:58.440 which was the parent company of Showtime. They said that 0:03:58.480 --> 0:04:01.400 Cinemax was being offered at low cost. In other words, 0:04:01.680 --> 0:04:04.640 HBO was suffering a loss to run Cinemax just so 0:04:04.680 --> 0:04:09.160 that they could undercut Showtime. Uh now, if you remember 0:04:09.720 --> 0:04:12.640 Showtime kind of if Viacom also did this thing in 0:04:12.640 --> 0:04:14.840 the last episode we talked about, where it showed Viacomm 0:04:14.920 --> 0:04:19.800 ended up buying aggressively undercut HBO. They essentially muscled HBO 0:04:19.920 --> 0:04:23.599 out of entire markets because they made this exclusive agreement 0:04:23.640 --> 0:04:26.680 with the largest cable provider in the United States at 0:04:26.680 --> 0:04:29.160 that time. So there's a little bit of a war 0:04:29.320 --> 0:04:32.280 going on. Yeah, a little bit of a oh yeah, 0:04:32.560 --> 0:04:35.280 so yeah, that's that's kind of the technical term. But Cinemax, 0:04:35.480 --> 0:04:38.640 you know, starts doing pretty well. And also in nineteen eight, 0:04:38.880 --> 0:04:41.800 HBO has an affiliate in every single state in the 0:04:41.920 --> 0:04:44.520 United States. Now, if you listen to our last episode, 0:04:44.520 --> 0:04:46.919 you realize that's a big deal. This is the first 0:04:46.960 --> 0:04:49.280 time that any channel has been able to do that, 0:04:49.600 --> 0:04:53.080 and it is because they're using this satellite delivery system 0:04:53.080 --> 0:04:56.320 where the various cable operators across the United States have 0:04:56.520 --> 0:04:59.800 the receiver dishes that bring in the signal and then 0:04:59.839 --> 0:05:02.360 they can distribute it to their customers. So now there's 0:05:02.360 --> 0:05:05.200 an affiliate in every state. Remember it started off justin 0:05:05.279 --> 0:05:09.080 Wilkes Barre, Pennsylvania. Then it's spread through most of Pennsylvania, 0:05:09.160 --> 0:05:11.599 then to New York, and then finally started to creep 0:05:11.600 --> 0:05:14.240 out into the rest of the United States. So big 0:05:14.279 --> 0:05:17.200 moment for HBO. All of this is allowing them to 0:05:17.240 --> 0:05:20.560 have a pretty incredible profit considering that they only hit 0:05:20.600 --> 0:05:25.040 profitability a year or two previously. Um they their profits 0:05:25.080 --> 0:05:30.560 have grown from which again understandable because now they're they're 0:05:30.600 --> 0:05:34.599 available in way more markets. So the company is experiencing 0:05:34.720 --> 0:05:38.159 astronomical growth at this point because because once the cable 0:05:38.200 --> 0:05:41.960 operators decide yes, we will carry HBO, that gives HBO 0:05:42.080 --> 0:05:45.640 the chance to target new customer bases that they had 0:05:45.680 --> 0:05:48.640 no access to before. Oh sure, um and there as 0:05:48.680 --> 0:05:52.400 a result able to offer their employees some pretty ridiculous benefits. 0:05:52.640 --> 0:05:54.920 Um It. Kind of the stories that I've read about 0:05:54.920 --> 0:05:56.920 it at the time remind me a little bit of 0:05:57.000 --> 0:06:00.280 what happened after the Facebook boom um and and just 0:06:00.360 --> 0:06:05.560 that that tiny, free, freewheeling startup culture that turned into 0:06:05.920 --> 0:06:10.359 this very large, very freewheeling startup culture. It reminds me 0:06:10.400 --> 0:06:14.400 a lot of what Google attempts to continue to push 0:06:14.480 --> 0:06:17.120 at the Google Plex. And of course, anyone who's worked 0:06:17.120 --> 0:06:19.880 in one of the satellite offices of Google probably is 0:06:19.960 --> 0:06:22.640 very familiar with what things what what's available at the 0:06:22.640 --> 0:06:25.440 Google Plex versus what's available in some of those satellite offices. 0:06:26.600 --> 0:06:30.720 So there was also some tension between say HBO and 0:06:30.800 --> 0:06:33.720 the folks over at time. Keep in mind that at 0:06:33.720 --> 0:06:36.400 this point they're still all working in the same building. 0:06:36.520 --> 0:06:39.760 They're working in Time Incorporate its headquarters, and so you 0:06:39.839 --> 0:06:44.320 had sort of these freewheeling young guys who are running HBO, 0:06:44.440 --> 0:06:47.000 who are having parties all the time. They said that 0:06:47.160 --> 0:06:50.760 essentially the the motto at HBO is work, work, work, party, party, party, 0:06:50.920 --> 0:06:54.240 and uh and so you know, any excuse to get 0:06:54.320 --> 0:06:56.840 together and have a big dinner and you know, they're 0:06:56.839 --> 0:06:59.520 still getting stuff done. But they also took a lot 0:06:59.520 --> 0:07:03.000 of time and develop this camaraderie. There's still some tension 0:07:03.080 --> 0:07:07.080 actually within the company itself because a very different culture 0:07:07.240 --> 0:07:11.680 existed between Time and Coorporated employees and HBO. Now in 0:07:12.480 --> 0:07:15.160 one Showtime makes a big move, which you could argue 0:07:15.160 --> 0:07:18.640 at the time was mostly posturing. Uh. They decided to 0:07:18.720 --> 0:07:22.320 go to a full twenty four hour schedule, right because 0:07:22.560 --> 0:07:24.960 if you remember from our last episode again, at the time, 0:07:25.040 --> 0:07:27.320 these cable stations would sign off at a certain point 0:07:27.360 --> 0:07:30.640 every night. Yeah, like after midnight they'd say, all right, time, 0:07:30.720 --> 0:07:32.200 time to go to bed, because we don't have anything 0:07:32.200 --> 0:07:34.640 else we can show you. So Showtime goes to twenty 0:07:34.640 --> 0:07:38.160 four hours, not necessarily being able to support that with 0:07:38.360 --> 0:07:42.480 enough content so that they're not incredibly repetitive. But HBO, 0:07:42.560 --> 0:07:45.440 not to be outdone, follow suit. So later on in 0:07:45.520 --> 0:07:49.400 N one, they also become twenty four hour uh. And 0:07:49.480 --> 0:07:51.480 so you with anytime you wanted to turn on HBO 0:07:51.600 --> 0:07:53.080 it was three in the morning, you can turn on 0:07:53.200 --> 0:07:57.600 HBO and something would be playing. Uh. And then they 0:07:57.720 --> 0:08:00.520 end up also hitting the big time on of those 0:08:00.600 --> 0:08:02.760 pre buy movies we talked about. Now, this is where 0:08:02.880 --> 0:08:05.960 HBO puts in money in the pre production phase for 0:08:06.360 --> 0:08:09.520 a movie and in return, they get exclusive rights to 0:08:09.680 --> 0:08:12.360 show that movie on HBO for a certain length of time. 0:08:13.040 --> 0:08:16.320 And in this case, they hit the jackpot. Now, it's 0:08:16.320 --> 0:08:18.880 not a movie that I think a lot of people 0:08:19.000 --> 0:08:21.800 are going to be rip roar and excited about, but 0:08:21.920 --> 0:08:26.160 it was a critically acclaimed success. It was on Golden Pond. Yeah, 0:08:26.240 --> 0:08:30.680 it won multiple Academy Awards yep. So this exclusivity was 0:08:30.720 --> 0:08:33.320 a big deal. It was a movie that people had 0:08:33.360 --> 0:08:35.840 heard about, they knew that it was award winning, and 0:08:36.000 --> 0:08:38.480 HBO was the only place you could see it outside 0:08:38.480 --> 0:08:40.560 of the theater. Keep in mind, this is before the 0:08:40.640 --> 0:08:44.560 home video craze starts, like, this is really before the 0:08:44.800 --> 0:08:48.840 VCR has taken off. So HBO exclusivity in this case 0:08:49.000 --> 0:08:53.040 was really important. Now they started moving to these output deals, 0:08:53.040 --> 0:08:55.199 which is when a pay TV service agrees to take 0:08:55.240 --> 0:08:57.680 on all the movies made by a certain studio over 0:08:57.760 --> 0:09:00.800 a certain time span. Again, tends to be kind of 0:09:00.840 --> 0:09:03.640 a grab bag situation. You might get a few big hits, 0:09:03.760 --> 0:09:05.920 you might have some mediocre films in there that you know, 0:09:06.000 --> 0:09:08.040 some people care about. But most people don't, and you 0:09:08.080 --> 0:09:10.720 can have some outright flops, so a little bit of 0:09:10.720 --> 0:09:13.720 a risky situation. There's also this idea of a multi 0:09:13.800 --> 0:09:16.200 year agreement which HBO would agree to pick up a 0:09:16.200 --> 0:09:18.680 certain number of films the studio would produce over a 0:09:18.679 --> 0:09:20.719 given period of time, but have a little bit more 0:09:20.800 --> 0:09:25.240 safe which one like you made, we want twenty movies 0:09:25.240 --> 0:09:26.720 that you guys are going to make over the course 0:09:26.720 --> 0:09:30.600 of the next five years. Yeah. So once the five 0:09:30.679 --> 0:09:35.600 year period starts coming up, you're like, well, now we're stuck. Yeah, 0:09:35.679 --> 0:09:37.560 but but we got to be choosy at the beginning. 0:09:38.160 --> 0:09:42.640 Either way, these exclusivity deals were really really expensive, and 0:09:42.840 --> 0:09:46.080 it meant that it was tough to to make a 0:09:46.080 --> 0:09:49.360 profit unless you continuously grow. Now, at this time that 0:09:49.440 --> 0:09:53.240 wasn't a problem because cable was still entering in lots 0:09:53.280 --> 0:09:56.319 more markets, which meant you had access to brand new customers. 0:09:56.679 --> 0:09:59.680 So in the early days kind of automatically growing. Yeah. Yeah, 0:09:59.840 --> 0:10:02.960 you didn't have to worry about about boosting your your 0:10:02.960 --> 0:10:05.320 customer base so much because people were still eager to join. 0:10:05.880 --> 0:10:07.719 It wasn't until a couple of years later that things 0:10:07.760 --> 0:10:10.800 got a little tougher. But we'll get there. So companies 0:10:10.800 --> 0:10:12.960 were paying these big bucks for exclusive rights to movies 0:10:13.000 --> 0:10:16.640 for just a couple of years. Eventually those exclusivity rights 0:10:16.679 --> 0:10:19.920 would expire and those movies could be carried on other 0:10:19.960 --> 0:10:23.560 pay television stations like Showtime could pick it up. So 0:10:23.920 --> 0:10:27.280 in the long run, you would have a bank of 0:10:27.360 --> 0:10:31.520 movies that was essentially identical to your competitors. So for 0:10:31.559 --> 0:10:33.840 a couple of years you have exclusivity, but it wasn't 0:10:33.840 --> 0:10:37.040 a long term you would up even out. Yeah. So yeah, 0:10:37.040 --> 0:10:39.560 one of those things that that you know, they really 0:10:39.559 --> 0:10:42.360 had to look at a little bit later because it 0:10:42.400 --> 0:10:44.760 was just it was not the best way to continuously 0:10:44.800 --> 0:10:50.000 grow your revenue. Now we get one of my favorite stories. 0:10:50.320 --> 0:10:52.560 Yeah yeah, okay, this this is a big one. So 0:10:52.559 --> 0:10:56.720 so twenty century Fox negotiated to get Star Wars onto 0:10:56.760 --> 0:11:02.360 pay TV. Yes, so Star Wars big movie. Of course, 0:11:02.360 --> 0:11:04.320 that's when Return of the Jedi came out. So the 0:11:04.320 --> 0:11:07.000 original trilogy, you know, the only one that exists, is 0:11:07.040 --> 0:11:10.040 complete at this time, and Star Wars itself, the movie 0:11:10.080 --> 0:11:14.000 that started it all. Uh, the second big blockbuster following 0:11:14.080 --> 0:11:18.640 Jaws from is available to go on to pay TV. However, 0:11:19.040 --> 0:11:21.360 it's not an exclusive deal. This is something they they 0:11:21.400 --> 0:11:25.240 negotiate to put it on every page television station essentially, 0:11:25.240 --> 0:11:27.960 so Showtime's gonna get HBO is gonna get it now. Normally, 0:11:28.400 --> 0:11:32.119 the way these channels like to try and and position 0:11:32.280 --> 0:11:35.439 the big ticket items that they get is to wait 0:11:35.840 --> 0:11:40.840 and put it out on prime time preferably like eight pm, yeah, Friday, Saturday, 0:11:40.880 --> 0:11:43.959 Sunday night, Sunday night, probably preferably to to really get 0:11:44.000 --> 0:11:46.280 all of the home viewers in right, so you would 0:11:46.320 --> 0:11:49.000 you know when the weekend would come around eight pm. 0:11:49.040 --> 0:11:50.960 That's when you could be guaranteed that that was when 0:11:51.000 --> 0:11:55.360 the biggest movies were going to be uh showcased on 0:11:55.480 --> 0:11:58.640 these pay television stations. However, Star Wars was such a 0:11:58.679 --> 0:12:02.280 big deal, being that summer blockbuster, that both Showtime and 0:12:02.400 --> 0:12:06.400 HBO wanted to make sure they took advantage of it 0:12:06.480 --> 0:12:08.640 and did not allow the other channel to show it 0:12:08.679 --> 0:12:11.280 before they did. So, HBO didn't want Showtime to show 0:12:11.280 --> 0:12:13.559 it first. Showtime didn't want HBO to show it first. 0:12:13.720 --> 0:12:17.320 According to the agreement they signed with Fox, neither could 0:12:17.320 --> 0:12:21.640 show it any time before six am on February one, 0:12:21.760 --> 0:12:24.120 so both of them scheduled the first showing of Star 0:12:24.160 --> 0:12:27.760 Wars to be six am February first, even knowing that 0:12:27.760 --> 0:12:30.720 that's not an ideal time for their customers. They just 0:12:30.760 --> 0:12:32.199 didn't want the other one to get the scoop, and 0:12:32.320 --> 0:12:36.040 HBO went a step further. So remember in that last 0:12:36.080 --> 0:12:38.360 episode where I talked about cable being a cutthroat business 0:12:38.360 --> 0:12:43.120 and nothing is really you know, off limits. That includes bribery. 0:12:43.240 --> 0:12:47.079 That's probably a strong word. HBO didn't bribe twentieth Century Fox. Well, 0:12:47.120 --> 0:12:49.920 they paid them more money. They paid them more money. 0:12:50.000 --> 0:12:52.040 That's very much like a bride. Yeah, so that they 0:12:52.040 --> 0:12:55.400 could be allowed to show Star Wars one minute after 0:12:55.520 --> 0:12:59.520 midnight on February one, so six hours before showtime could 0:12:59.600 --> 0:13:02.400 although they weren't allowed to announce it. Yeah, so you 0:13:02.480 --> 0:13:06.120 had to have been watching HBO at one midnight and 0:13:06.280 --> 0:13:09.280 one minute after midnight on February one to have noticed 0:13:09.320 --> 0:13:12.920 that this had happened. However, the they were able to 0:13:12.960 --> 0:13:17.199 say legitimately that they were the first paid television station 0:13:17.679 --> 0:13:20.160 to carry Star Wars, and that actually carried some weight. 0:13:20.559 --> 0:13:22.400 There were people who said, wait a minute, why is 0:13:22.520 --> 0:13:25.720 HBO showing it before showtime? I should have HBO not showtime. 0:13:25.800 --> 0:13:28.000 Despite the fact that we're talking about a six hour 0:13:28.080 --> 0:13:32.440 window when most people wouldn't be watching television anyway. Um, 0:13:32.520 --> 0:13:37.320 that that part didn't matter. So very interesting that this 0:13:37.760 --> 0:13:40.880 battle happened. It was another expensive battle, but an important one. 0:13:40.960 --> 0:13:42.400 As we all know, Star Wars one of the most 0:13:42.400 --> 0:13:45.560 important pieces of art created in the history. There's like 0:13:47.200 --> 0:13:51.280 the Mona Lisa Star Wars David, that's the order it 0:13:51.320 --> 0:13:56.240 goes in. So three. Also, there was another amazing piece 0:13:56.280 --> 0:14:01.240 of art premiered on HBO and original program aimed at children. Yeah, 0:14:01.320 --> 0:14:04.719 Jim Henson's Fraggle Rock. Yeah, down in Fraggle Rock. So 0:14:04.880 --> 0:14:07.520 I was a huge Fraggle Rock fan to back in 0:14:07.559 --> 0:14:10.679 the day. Um, they actually came to dragon Con and 0:14:10.840 --> 0:14:13.880 we covered the dragon Con parade. We actually shut this coverage. 0:14:13.960 --> 0:14:15.800 Me and Ben Bowlen and Lauren You were there and 0:14:16.240 --> 0:14:18.920 we did it like Macy's Thanksgiving Day parade style. It 0:14:19.000 --> 0:14:21.440 never it never saw the light of day, probably because 0:14:21.480 --> 0:14:24.000 there were long stretches where nothing was happening. Oh we 0:14:24.000 --> 0:14:26.520 we we haven't had anyone had time to edit the 0:14:26.520 --> 0:14:29.280 who whole thing was really long. It was very long. Yeah, 0:14:29.320 --> 0:14:31.360 but the Fraggles were in it. They were in it. 0:14:31.400 --> 0:14:33.480 And there is a photo gallery that I did I 0:14:33.480 --> 0:14:36.120 was running a still camera through the parade and so 0:14:36.280 --> 0:14:38.640 and and she she waved at me. Yeah. I got 0:14:38.680 --> 0:14:41.560 choked up, Yeah, I got choked up watching the Fraggles. 0:14:41.600 --> 0:14:43.560 I mean, I'm not I'm not embarrassed to admit it. 0:14:43.720 --> 0:14:45.280 The Fraggles meant a lot to be I'm getting a 0:14:45.280 --> 0:14:47.840 little tiory right now in fact, but anyway, Jim Henson 0:14:48.240 --> 0:14:52.280 Fraggle Rock. Now, Jim Henson had already had a relationship 0:14:52.320 --> 0:14:55.280 with HBO. HBO had produced a couple of years earlier 0:14:55.520 --> 0:14:59.120 a Christmas special Emitt Otter's jug Band Christmas. So now 0:14:59.280 --> 0:15:03.320 Jim Henson had the freedom to create this entire children's series, 0:15:03.320 --> 0:15:07.160 which lasted five seasons, and it ended up being a 0:15:07.200 --> 0:15:10.440 big success. It was one of the few breakaway successes 0:15:10.560 --> 0:15:12.960 of children's programming on HBO. A lot of the other 0:15:13.000 --> 0:15:16.960 programming UH people liked the idea of but no one 0:15:17.080 --> 0:15:21.200 ever bothered to watch, so Fraggle Rock was not among that. 0:15:21.200 --> 0:15:24.000 That was an incredibly popular show, in fact, so popular 0:15:24.440 --> 0:15:28.760 that HBO would end up making other versions of Fraggle 0:15:28.840 --> 0:15:32.160 Rock for other countries, and some of them would have 0:15:32.480 --> 0:15:36.240 their own version of Doc and Sprocket that wouldn't necessarily 0:15:36.280 --> 0:15:38.320 be called Doc and Sprocket and they would be different 0:15:38.360 --> 0:15:39.920 people like that. I think in England it was like 0:15:40.000 --> 0:15:44.280 a lighthouse keeper who was really crabby. But anyway, they 0:15:44.320 --> 0:15:46.920 would also be dubbed into different languages, so everyone had 0:15:46.960 --> 0:15:49.760 their own version of Fraggle Rock, which was kind of cool. 0:15:49.800 --> 0:15:52.640 It wasn't just a you know, it wasn't just switching 0:15:52.640 --> 0:15:56.640 out the soundtrack. It was actually Taylor made to these nations. Uh. 0:15:56.680 --> 0:15:59.000 And another series that premiered that year, and I remember 0:15:59.040 --> 0:16:02.360 this series too, was not necessarily The News, which was 0:16:02.400 --> 0:16:05.080 kind of a news parody sketch comedy show. It was 0:16:05.200 --> 0:16:09.280 the news thing was kind of the the conceit the 0:16:09.320 --> 0:16:12.600 bookends for these various sketches that may or may not 0:16:12.640 --> 0:16:15.720 be very loosely connected, right, And it was kind of no. 0:16:15.800 --> 0:16:20.040 Brian's very first television writing gig also uh not consistently 0:16:20.160 --> 0:16:23.480 very good, but but one of the examples of HBO 0:16:23.520 --> 0:16:27.360 getting into original programming, which is again they started looking 0:16:27.520 --> 0:16:31.040 at how to differentiate themselves from the showtimes of the world, 0:16:31.560 --> 0:16:34.400 and these exclusivity deals, like we said, could be really 0:16:34.400 --> 0:16:39.040 really expensive, so maybe making original programming would have been 0:16:39.160 --> 0:16:42.840 a better approach. Now they learned that making good original 0:16:42.880 --> 0:16:45.720 programming is very tricky. It might not be expensive, but 0:16:45.840 --> 0:16:48.680 it's very hard to do, and getting people to pay 0:16:48.720 --> 0:16:52.520 attention is also sometimes tricky. Right, Yeah, sometimes they would 0:16:52.520 --> 0:16:56.040 make an amazing show that the critics loved in nobody watched. 0:16:56.120 --> 0:16:58.840 We will talk about several of those in our third episode. 0:16:58.920 --> 0:17:02.600 But meanwhile, in nine, twelve years after its inception, HBO 0:17:02.680 --> 0:17:05.840 finally got their own offices. Yeah, they moved over into 0:17:05.880 --> 0:17:09.399 a building on Avenue, and it had the nickname the 0:17:09.440 --> 0:17:14.520 flash Cube. All right, kids, years ago, like in the eighties, 0:17:15.160 --> 0:17:18.680 cameras which had film in them, none of this digital 0:17:18.680 --> 0:17:23.400 stuff also had flash you know, flashes like a separate 0:17:23.480 --> 0:17:26.760 flash unity had to attach to the top little cube 0:17:27.240 --> 0:17:29.640 that would flash light so you could get some light 0:17:29.760 --> 0:17:33.080 on that image you're trying to capture onto film. That's 0:17:33.080 --> 0:17:34.720 why it was called the flash cube because the building 0:17:34.720 --> 0:17:37.080 looked like one. So this building that looked like something 0:17:37.119 --> 0:17:40.280 you've never seen looked exactly like just just like that thing. 0:17:40.480 --> 0:17:45.360 So now you had a building where the actual departments 0:17:45.359 --> 0:17:48.680 could all sit together. The divisions were no longer divided. 0:17:49.000 --> 0:17:51.919 They could all be in a cohesive unit. So that 0:17:52.080 --> 0:17:55.399 amazing camaraderie they had developed back at Time Incorporated when 0:17:55.400 --> 0:17:58.880 they had this kind of startup mentality went away. It's 0:17:58.920 --> 0:18:02.120 completely ruined. Yeah, Suddenly they were physically closer and yet 0:18:02.280 --> 0:18:06.119 emotionally so distant. Um. It turned out that HBO was 0:18:06.119 --> 0:18:08.280 starting to become more of a business, less of this 0:18:08.359 --> 0:18:11.919 kind of startup entrepreneur approach, and I had more of 0:18:12.000 --> 0:18:15.040 a of a corporate structure. Yeah. And it also was 0:18:15.280 --> 0:18:19.000 when HBO started to notice that growing as a business 0:18:19.040 --> 0:18:21.800 was going to get very difficult, they did what was 0:18:21.840 --> 0:18:26.000 called hitting the wall. The wall in this case was saturation. 0:18:26.280 --> 0:18:29.600 You had a saturation point where cable had pretty much 0:18:29.680 --> 0:18:32.359 entered all the markets that was gonna go into. So 0:18:32.440 --> 0:18:34.920 that meant that you no longer could expect to suddenly 0:18:34.920 --> 0:18:39.360 have access to twenty thousand new subscribers potential new subscribers 0:18:39.800 --> 0:18:43.399 because someone finally built the infrastructure out to this one region. 0:18:43.800 --> 0:18:46.239 Now all the regions pretty much had cable, So they 0:18:46.280 --> 0:18:48.200 were not going to be any of these these gift 0:18:48.240 --> 0:18:51.639 baskets of potential customers just arriving at HBO. They were 0:18:51.640 --> 0:18:54.120 gonna have to work for it. And also on top 0:18:54.160 --> 0:18:56.360 of that, they had a churn rate going on right. 0:18:57.200 --> 0:19:00.000 So churn rate is when you lose a certain number 0:19:00.280 --> 0:19:04.720 of customers over a course of a general amount of time. 0:19:04.760 --> 0:19:08.119 So there's was about two percent per month back in, 0:19:09.200 --> 0:19:11.639 which means that in order to just stay even, you 0:19:11.720 --> 0:19:14.679 have to grow by two percent, right to to just 0:19:14.760 --> 0:19:17.199 maintain the same number of customers from the beginning of 0:19:17.200 --> 0:19:18.560 the month to the end of the month. If you 0:19:18.600 --> 0:19:20.439 want to grow beyond that, then obviously you have to 0:19:20.440 --> 0:19:23.280 get more than two percent new customers to replace the 0:19:23.280 --> 0:19:25.520 two percent who who left. Now, some of the people 0:19:25.520 --> 0:19:28.640 who left, they left because they were relocating and eventually 0:19:28.680 --> 0:19:31.359 maybe they come back, but some of them were just saying, oh, 0:19:31.400 --> 0:19:33.439 I don't want to have this expense anymore. So you 0:19:33.480 --> 0:19:36.840 have to convince them, hey, we're worth the money, or 0:19:36.920 --> 0:19:39.080 you had to convince new people, hey we're worth the money. 0:19:39.119 --> 0:19:41.639 And now there are fewer new people to get access to. 0:19:42.440 --> 0:19:45.639 So this was a very scary time at HBO. You 0:19:45.720 --> 0:19:48.840 had this young company that had been used to this 0:19:48.920 --> 0:19:52.639 incredible growth suddenly realizing, oh, things are not going to 0:19:52.760 --> 0:19:54.919 be as easy anymore. We're not going to have this 0:19:55.600 --> 0:19:58.240 essentially blank check that we can hand out for these 0:19:58.280 --> 0:20:01.920 exclusivity deals. Were not gonna have this this endless line 0:20:01.920 --> 0:20:04.240 of new customers coming in through the door. What are 0:20:04.240 --> 0:20:06.000 we gonna do? And in fact, one of the first 0:20:06.040 --> 0:20:09.040 things they had to do was layoff about a hundred 0:20:09.040 --> 0:20:11.439 and twenty five employees, which was the first time in 0:20:11.600 --> 0:20:15.399 HBO's history that people had been let go like that. Also, 0:20:15.440 --> 0:20:19.080 around the same time, the VCR became a thing, and 0:20:19.160 --> 0:20:23.400 that was a boy talk about a big bite out 0:20:23.400 --> 0:20:26.439 of the business. So keep in mind, remember this is 0:20:26.440 --> 0:20:30.280 the time when HBO their main purpose was to create 0:20:30.920 --> 0:20:33.480 way for people to watch these movies that were uncut 0:20:33.520 --> 0:20:36.840 and uncensored that wouldn't be carried on broadcast television. But 0:20:36.920 --> 0:20:39.280 now with the birth of the VCR and the growth 0:20:39.359 --> 0:20:41.439 of the home video market where you could go to 0:20:41.480 --> 0:20:43.880 a rental store and rent a movie, you can get 0:20:43.920 --> 0:20:47.680 access to all sorts of movies beyond the what we'll 0:20:47.720 --> 0:20:51.040 call the playlist that HBO had access to. Remember, HBO's 0:20:51.080 --> 0:20:53.600 paying licensing fees to be able to show these movies, 0:20:54.040 --> 0:20:56.439 so they don't have licenses for every movie. They have 0:20:56.480 --> 0:20:59.520 to pick and choose, and sometimes they pick before they 0:20:59.560 --> 0:21:01.119 even know what the movie is going to be like, 0:21:01.160 --> 0:21:03.000 and sometimes they lose out on that. Oh sure, and 0:21:03.040 --> 0:21:05.000 they can only air so many things at a time, 0:21:05.040 --> 0:21:07.040 they can only pay to keep so many things on 0:21:07.080 --> 0:21:09.560 the air at a single time, and whatever they happen 0:21:09.640 --> 0:21:12.359 to have might not be what you feel like watching. Once, 0:21:12.760 --> 0:21:18.000 once stores started carrying rentable VHS tapes, it was I 0:21:18.040 --> 0:21:21.199 mean for for younger listeners. I mean, like, I have 0:21:21.240 --> 0:21:24.200 a hard time imagining this, and I remember VHS tapes. 0:21:24.240 --> 0:21:26.919 I remember all of that very clearly, and and it 0:21:27.000 --> 0:21:29.399 still sounds crazy to me that you that there was 0:21:29.440 --> 0:21:32.080 a time when you couldn't just watch whatever you wanted. Yeah. 0:21:32.280 --> 0:21:34.119 Now you would go into the store and you would 0:21:34.119 --> 0:21:37.960 hope that that one copy of Young Einstein was still available, 0:21:38.359 --> 0:21:40.880 because you know what a breakaway hit that was. Um, 0:21:40.960 --> 0:21:44.240 hey that was an important film. Hey yeah, who's serious? 0:21:44.280 --> 0:21:46.840 One of my heroes. Okay, I'm not don't take any 0:21:46.960 --> 0:21:50.199 thing away from the series, but yeah, just just the 0:21:50.240 --> 0:21:52.080 fact that you go into the store, you know, and 0:21:52.160 --> 0:21:54.400