WEBVTT - TechStuff Classic: The HBO Story- Part Two 0:00:04.400 --> 0:00:07.800 Welcome to Tech Stuff, a production from I Heart Radio. 0:00:12.000 --> 0:00:14.560 Hey there, and welcome to tech Stuff. I'm your host 0:00:14.640 --> 0:00:17.200 job on Strickland. I'm an executive producer with iHeart Radio 0:00:17.239 --> 0:00:21.160 and I love all things tech. And it is time 0:00:21.200 --> 0:00:23.520 front of a classic episode and it's actually gonna be 0:00:23.560 --> 0:00:28.920 a continuation of our previous classic episode. So this episode 0:00:29.200 --> 0:00:33.000 the HBO Story Part two, originally published on May seven, 0:00:35.120 --> 0:00:37.640 and um, we are just going to jump right in, 0:00:38.040 --> 0:00:41.839 get back into the story. Let's go. HBO as an entity, 0:00:42.200 --> 0:00:46.720 has heavily influenced what cable television is and what entertainment 0:00:46.760 --> 0:00:50.159 delivery services are in general. If it hadn't been for HBO, 0:00:50.680 --> 0:00:55.480 our landscape would be dramatically different today. So that's why 0:00:55.520 --> 0:00:57.760 we're doing it. In fact, think about it. Without HBO, 0:00:58.720 --> 0:01:03.480 you don't have cable companies, cable system operators pushing cable 0:01:03.680 --> 0:01:07.520 copper cable into cities anywhere near as quickly. Right, you 0:01:07.600 --> 0:01:09.520 might not have ever seen it happen, or it might 0:01:09.560 --> 0:01:12.160 have taken a decade longer, which means you would not 0:01:12.240 --> 0:01:16.000 even have the infrastructure that the Internet relies on today. 0:01:16.040 --> 0:01:20.119 For high speed internet, we'd be using telephone lines. Still, yeah, 0:01:20.200 --> 0:01:23.600 you might Furthermore, not have had people adopt as quickly 0:01:23.680 --> 0:01:29.000 the idea of using satellites to beam information, uh television 0:01:29.040 --> 0:01:34.200 information out to many far spread networks. Exactly So, like 0:01:34.240 --> 0:01:37.479 we said, landscape very different without HBO. Whether you love 0:01:37.520 --> 0:01:40.559 it or hate it, it's a large part of why 0:01:40.600 --> 0:01:43.160 the world is as far as the cable world and 0:01:43.319 --> 0:01:46.160 entertainment worlds, why things are the way they are so 0:01:46.160 --> 0:01:49.880 so um. A little tiny bit of backstory, very tiny. 0:01:50.560 --> 0:01:55.160 HBO owned by Time, Yes, Time Incorporated, not not Time, 0:01:55.280 --> 0:01:59.680 the the physical entity like the actual not Father Time, 0:02:00.080 --> 0:02:04.640 the progression of changes throughout not the fourth dimension that 0:02:04.760 --> 0:02:07.240 we know of, Time Incorporated, the company that owned Time 0:02:07.280 --> 0:02:12.320 magazine or still does Time Magazine, Fortune Magazine, Sports Illustrated, etcetera, etcetera. Correct. So, 0:02:12.360 --> 0:02:16.040 in Time launched a second pay TV channel called Cinemax, 0:02:16.480 --> 0:02:20.560 primarily as a competitor to the less expensive Showtime. Yes, so, 0:02:22.000 --> 0:02:24.440 there were a couple of different ways to compete against Showtime. 0:02:24.440 --> 0:02:27.320 One was let's try and grab as much exclusive content 0:02:27.360 --> 0:02:30.239 as we possibly can that Showtime can't have. And thus 0:02:30.280 --> 0:02:32.760 people will say, hey, we want HBO because they have 0:02:32.880 --> 0:02:37.280 these movies and Showtime doesn't. However, that's really expensive Another 0:02:37.320 --> 0:02:40.920 approach was to create a second paid television network, Cinemax, 0:02:41.280 --> 0:02:43.920 and to run a lot of the same programming that 0:02:44.080 --> 0:02:47.760 HBO itself already had, and maybe concentrate on some genres 0:02:48.120 --> 0:02:53.560 that didn't necessarily fit into HBO's corporate appearances, like they're there, 0:02:53.280 --> 0:02:56.600 their their culture, and furthermore, that happened to be a 0:02:56.639 --> 0:02:59.520 lot less expensive to purchase. Like I like cult films 0:02:59.600 --> 0:03:02.799 and kind of obscure noir stuff. One of my favorite 0:03:02.800 --> 0:03:05.960 cult films of all time I first saw on Cinemax. 0:03:06.040 --> 0:03:08.200 I had heard about it, but I've never seen it. 0:03:08.560 --> 0:03:12.440 And that film, of course, is the brilliant movie Shock Treatment. 0:03:12.919 --> 0:03:15.919 The not a sequel, not a prequel, but an equal 0:03:16.080 --> 0:03:18.520 to the Rocky Horror Picture Show. And that's how I 0:03:18.560 --> 0:03:20.920 saw it the first time I ever experienced it. It 0:03:21.000 --> 0:03:24.160 was shown on Cinemax because it fit into that realm 0:03:24.280 --> 0:03:27.080 of the Cinemax movie where it were there were some 0:03:27.120 --> 0:03:29.880 of these kind of cult classic, schlocky, sort of cheap 0:03:30.000 --> 0:03:34.160 movies to license, but they still had their audience. So 0:03:35.120 --> 0:03:39.960 this approach did not come without criticism, specifically from Viacom, 0:03:40.000 --> 0:03:42.960 which was the parent company of Showtime. They said that 0:03:43.000 --> 0:03:46.040 Cinemax was being offered at below cost. In other words, 0:03:46.160 --> 0:03:49.160 HBO was suffering a loss to run Cinemax just so 0:03:49.200 --> 0:03:53.560 that they could undercut Showtime. Uh now, if you remember 0:03:54.200 --> 0:03:57.200 Showtime kind of Viacom also did this thing in the 0:03:57.280 --> 0:03:59.520 last episode we talked about, where it showed Viacom end 0:03:59.600 --> 0:04:04.640 up by aggressively undercut HBO. They essentially muscled HBO out 0:04:04.680 --> 0:04:08.240 of entire markets because they made this exclusive agreement with 0:04:08.320 --> 0:04:11.640 the largest cable provider in the United States at that time. 0:04:12.000 --> 0:04:14.560 So there's a little bit of a war going on. Yeah, 0:04:14.640 --> 0:04:17.760 a little bit of a oh yeah, so yeah, that's 0:04:17.760 --> 0:04:20.159 that's kind of the technical term. But Cinemax, you know, 0:04:20.360 --> 0:04:23.760 starts doing pretty well. And also in nineteen HBO has 0:04:23.800 --> 0:04:27.480 an affiliate in every single state in the United States. Now, 0:04:27.640 --> 0:04:29.640 if you listen to our last episode, you realize that's 0:04:29.640 --> 0:04:32.240 a big deal. This is the first time that any 0:04:32.320 --> 0:04:34.680 channel has been able to do that, and it is 0:04:34.760 --> 0:04:38.320 because they're using this satellite delivery system where the various 0:04:38.360 --> 0:04:42.839 cable operators across the United States have the receiver dishes 0:04:42.960 --> 0:04:45.080 that bring in the signal and then they can distribute 0:04:45.120 --> 0:04:47.560 it to their customers. So now there's an affiliate in 0:04:47.600 --> 0:04:51.160 every state. Remember, It started off justin Wilkes Bar, Pennsylvania. 0:04:51.640 --> 0:04:54.480 Then it's spread through most of Pennsylvania, then to New York, 0:04:54.600 --> 0:04:56.880 and then finally started to creep out into the rest 0:04:56.920 --> 0:05:00.520 of the United States. So big moment for HBO. All 0:05:00.560 --> 0:05:03.160 of this is allowing them to have a pretty incredible 0:05:03.240 --> 0:05:06.680 profit considering that they only hit profitability a year or 0:05:06.680 --> 0:05:12.880 two previously. Um. They their profits have grown from which 0:05:12.920 --> 0:05:17.000 again understandable because now they're they're available in way more markets. 0:05:17.160 --> 0:05:21.120 So the company is experiencing astronomical growth at this point 0:05:21.320 --> 0:05:24.320 because because once the cable operators decide yes we will 0:05:24.360 --> 0:05:28.960 carry HBO, that gives HBO the chance to target new 0:05:29.000 --> 0:05:31.719 customer bases that they had no access to before. Oh sure, 0:05:31.880 --> 0:05:34.960 um and there as a result able to offer their 0:05:34.960 --> 0:05:38.120 employees some pretty ridiculous benefits. Um It kind of the 0:05:38.400 --> 0:05:40.400 stories that I've read about it at the time remind 0:05:40.480 --> 0:05:43.360 me a little bit of what happened after the Facebook boom, 0:05:43.839 --> 0:05:47.920 um and and just that that tiny, free, free wheeling 0:05:48.000 --> 0:05:53.080 startup culture that turned into this very large, very freewheeling 0:05:53.160 --> 0:05:56.560 startup culture. It reminds me a lot of what Google 0:05:56.600 --> 0:06:00.400 attempts to continue to push at the Google Plex and 0:06:00.440 --> 0:06:02.680 of course, anyone who's worked in one of the satellite 0:06:02.720 --> 0:06:05.919 offices of Google probably is very familiar with what things, 0:06:06.080 --> 0:06:08.760 what what's available at the Googleplex versus what's available in 0:06:08.800 --> 0:06:12.760 some of those satellite offices. So there was also some 0:06:12.880 --> 0:06:16.719 tension between say HBO and the folks over at Time. 0:06:16.960 --> 0:06:19.560 Keep in mind that at this point they're still all 0:06:19.600 --> 0:06:22.719 working in the same building. They're working in Time Incorporate 0:06:22.760 --> 0:06:25.920 its headquarters, and so you had sort of these freewheeling 0:06:26.000 --> 0:06:30.440 young guys who are running HBO, who are having parties 0:06:30.480 --> 0:06:32.880 all the time. They said that essentially, the the motto 0:06:32.920 --> 0:06:36.200 at HBO is work, work, work, party, party, party and uh. 0:06:36.320 --> 0:06:39.359 And so you know, any excuse to get together and 0:06:39.400 --> 0:06:41.880 have a big dinner, and you know, they're still getting 0:06:41.880 --> 0:06:44.360 stuff done. But they also took a lot of time 0:06:44.400 --> 0:06:48.239 and developed this camaraderie. There's still some tension actually within 0:06:48.279 --> 0:06:52.640 the company itself because a very different culture existed between 0:06:52.680 --> 0:06:57.680 Time and Coorporated employees and HBO. Now in one Showtime 0:06:57.720 --> 0:07:00.000 makes a big move, which you could argue at the time, 0:07:00.000 --> 0:07:03.719 Time was mostly posturing. Uh. They decided to go to 0:07:03.960 --> 0:07:07.279 a full twenty four hour schedule, right because if you 0:07:07.279 --> 0:07:09.760 remember from our last episode. Again, at the time, these 0:07:09.760 --> 0:07:12.640 cable stations would sign off at a certain point every night. Yeah, 0:07:12.680 --> 0:07:15.560 like after midnight they'd say, all right, time, time to 0:07:15.560 --> 0:07:16.960 go to bed, because we don't have anything else we 0:07:17.000 --> 0:07:19.760 can show you. So showtime goes to twenty four hours, 0:07:20.160 --> 0:07:23.720 not necessarily being able to support that with enough content 0:07:23.800 --> 0:07:27.280 so that they're not incredibly repetitive, but HBO, not to 0:07:27.280 --> 0:07:31.200 be outdone, follow suit. So later on in they also 0:07:31.280 --> 0:07:34.960 become twenty four hour. Uh. And so you with anytime 0:07:35.000 --> 0:07:36.600 you wanted to turn on HBO it was three in 0:07:36.600 --> 0:07:39.400 the morning, you can turn on HBO and something would 0:07:39.480 --> 0:07:43.400 be playing. Uh. And then they end up also hitting 0:07:43.400 --> 0:07:46.040 the big time on one of those pre buy movies 0:07:46.080 --> 0:07:48.120 we talked about. Now, this is where HBO puts in 0:07:48.200 --> 0:07:51.720 money in the pre production phase for a movie and 0:07:51.760 --> 0:07:54.960 in return, they get exclusive rights to show that movie 0:07:54.960 --> 0:07:57.840 on HBO for a certain length of time. And in 0:07:57.840 --> 0:08:01.080 this case, they hit the jackpot. Now, it's not a 0:08:01.120 --> 0:08:03.760 movie that I think a lot of people are going 0:08:03.800 --> 0:08:06.760 to be rip roar and excited about, but it was 0:08:07.240 --> 0:08:10.720 a critically acclaimed success. It was on Golden Pond. Yeah, 0:08:10.760 --> 0:08:15.200 it won multiple Academy Awards. YEP. So this exclusivity was 0:08:15.240 --> 0:08:17.840 a big deal. It was a movie that people had 0:08:17.880 --> 0:08:20.360 heard about, they knew that it was award winning, and 0:08:20.520 --> 0:08:23.000 HBO was the only place you could see it outside 0:08:23.000 --> 0:08:25.080 of the theater. Keep in mind, this is before the 0:08:25.120 --> 0:08:29.160 home video craze starts, like, this is really before the 0:08:29.280 --> 0:08:33.320 VCR has taken off, So HBO exclusivity in this case 0:08:33.480 --> 0:08:37.560 was really important. Now they started moving to these output deals, 0:08:37.559 --> 0:08:39.720 which is when a pay TV service agrees to take 0:08:39.760 --> 0:08:42.200 on all the movies made by a certain studio over 0:08:42.280 --> 0:08:45.320 a certain time span. Again, tends to be kind of 0:08:45.320 --> 0:08:48.160 a grab bag situation. You might get a few big hits, 0:08:48.280 --> 0:08:50.440 you might have some mediocre films in there that you know, 0:08:50.480 --> 0:08:52.560 some people care about but most people don't. And you 0:08:52.559 --> 0:08:55.199 could have some outright flops. So a little bit of 0:08:55.240 --> 0:08:58.200 a risky situation. There's also this idea of a multi 0:08:58.320 --> 0:09:00.600 year agreement which HBO would have agreed to pick up 0:09:00.640 --> 0:09:03.079 a certain number of films the studio would produce over 0:09:03.120 --> 0:09:05.040 a given period of time, but have a little bit 0:09:05.040 --> 0:09:09.440 more safe which one like you made. We want twenty 0:09:09.440 --> 0:09:10.959 movies that you guys are going to make over the 0:09:11.000 --> 0:09:14.640 course of the next five years. Yeah, so once the 0:09:14.960 --> 0:09:17.920 five year period starts coming up. You're like, well, now 0:09:18.840 --> 0:09:21.480 we're stuck. Yeah, but but we got to be choosy 0:09:21.480 --> 0:09:25.400 at the beginning. Either way, these exclusivity deals were really 0:09:25.440 --> 0:09:29.200 really expensive, and it meant that it was tough to 0:09:30.200 --> 0:09:32.800 to make a profit unless you continuously grow. Now, at 0:09:32.840 --> 0:09:36.400 this time that wasn't a problem because cable was still 0:09:36.520 --> 0:09:39.680 entering in lots more markets, which meant you had access 0:09:39.720 --> 0:09:42.439 to brand new customers. So in the early days kind 0:09:42.440 --> 0:09:45.400 of automatically growing. Yeah. Yeah, you didn't have to worry 0:09:45.440 --> 0:09:48.480 about about boosting your your customer base so much because 0:09:48.480 --> 0:09:51.160 people were still eager to join. It wasn't until a 0:09:51.200 --> 0:09:53.000 couple of years later that things got a little tougher, 0:09:53.000 --> 0:09:56.080 but we'll get there. So companies were paying these big 0:09:56.080 --> 0:09:58.080 bucks for exclusive rights to movies for just a couple 0:09:58.120 --> 0:10:02.680 of years. Eventually those exclusivity rights would expire and those 0:10:02.720 --> 0:10:06.240 movies could be carried on other pay television stations like 0:10:06.240 --> 0:10:09.480 Showtime could pick it up. So in the long run, 0:10:09.920 --> 0:10:14.000 you would have a bank of movies that was essentially 0:10:14.040 --> 0:10:16.680 identical to your competitors. So for a couple of years 0:10:16.679 --> 0:10:19.400 you'd have exclusivity, but it wasn't a long term You 0:10:19.400 --> 0:10:21.760 would wind up evening out. Yeah. So yeah, one of 0:10:21.760 --> 0:10:24.320 those things that that you know, they really had to 0:10:24.320 --> 0:10:27.200 look at a little bit later because it was just 0:10:27.320 --> 0:10:30.120 it was not the best way to continuously grow your revenue. 0:10:31.000 --> 0:10:35.560 Now three, we get one of my favorite stories. Yeah, yeah, okay, 0:10:35.600 --> 0:10:38.040 this this is a big one. So so twenty century 0:10:38.080 --> 0:10:42.400 Fox negotiated to get Star Wars onto pay TV. Yes, 0:10:43.000 --> 0:10:46.839 so Star Wars big movie in ninety seven. Of course, 0:10:46.880 --> 0:10:48.800 that's when Return of the Jedi came out. So the 0:10:48.840 --> 0:10:51.520 original trilogy, you know, the only one that exists, is 0:10:51.520 --> 0:10:54.560 complete at this time. And Star Wars itself, the movie 0:10:54.600 --> 0:10:58.520 that started it all. Uh, the second big blockbuster following 0:10:58.600 --> 0:11:03.160 Jaws from Live is available to go on to pay TV. However, 0:11:03.559 --> 0:11:05.880 it's not an exclusive deal. This is something they they 0:11:05.920 --> 0:11:09.680 negotiate to put it on every page television station essentially, 0:11:09.760 --> 0:11:12.480 so Showtime's gonna get HBO is gonna get it now. Normally, 0:11:12.920 --> 0:11:16.640 the way these channels like to try and and position 0:11:16.800 --> 0:11:19.920 the big ticket items that they get is to wait 0:11:20.360 --> 0:11:25.360 and put it out on prime time preferably like eight pm. Yeah, Friday, Saturday, 0:11:25.360 --> 0:11:28.480 Sunday night, Sunday night, probably preferably to to really get 0:11:28.520 --> 0:11:30.720 all of the home viewers in right, so you would 0:11:30.840 --> 0:11:33.480 you know when the weekend would come around eight pm. 0:11:33.520 --> 0:11:35.480 That's when you could be guaranteed that that was when 0:11:35.520 --> 0:11:39.840 the biggest movies were going to be uh showcased on 0:11:39.960 --> 0:11:43.160 these pay television stations. However, Star Wars was such a 0:11:43.200 --> 0:11:46.800 big deal, being that summer blockbuster, that both Showtime and 0:11:46.920 --> 0:11:50.920 HBO wanted to make sure they took advantage of it 0:11:50.960 --> 0:11:53.160 and did not allow the other channel to show it 0:11:53.200 --> 0:11:55.800 before they did. So HBO didn't want Showtime to show 0:11:55.800 --> 0:11:58.079 it first. Showtime didn't want HBO to show it first. 0:11:58.240 --> 0:12:01.800 According to the agreement they signed with Fox, neither could 0:12:01.840 --> 0:12:06.120 show it any time before six am on February one, 0:12:06.240 --> 0:12:08.640 So both of them scheduled the first showing of Star 0:12:08.679 --> 0:12:12.280 Wars to be six am, February first, even knowing that 0:12:12.280 --> 0:12:15.240 that's not an ideal time for their customers. They just 0:12:15.240 --> 0:12:16.720 didn't want the other one to get the scoop, and 0:12:16.840 --> 0:12:20.560 HBO went a step further. So remember in that last 0:12:20.600 --> 0:12:22.880 episode where I talked about cable being a cutthroat business 0:12:22.880 --> 0:12:27.640 and nothing is really you know, off limits, that includes bribery. 0:12:27.760 --> 0:12:31.360 That's probably a strong word. HBO didn't bribe twentieth century Fox. 0:12:31.400 --> 0:12:34.440 Well they paid them more money. They paid them more money. 0:12:34.480 --> 0:12:36.520 That's very much like a bribe. Yeah, so that they 0:12:36.559 --> 0:12:39.920 could be allowed to show Star Wars one minute after 0:12:40.040 --> 0:12:44.040 midnight on February one, so six hours before showtime could 0:12:44.120 --> 0:12:46.920 although they weren't allowed to announce it. Yeah, so you 0:12:47.000 --> 0:12:51.319 had to have been watching HBO at one midnight after 0:12:51.400 --> 0:12:54.920 midnight on February one to have noticed that this had happened. However, 0:12:55.640 --> 0:12:59.600 the they were able to say legitimately that they were 0:12:59.640 --> 0:13:03.280 the first to pay television station to carry Star Wars, 0:13:03.360 --> 0:13:05.920 and that actually carried some weight. There were people who said, 0:13:05.960 --> 0:13:08.640 wait a minute, why is HBO showing it before showtime? 0:13:08.679 --> 0:13:10.960 I should have HBO not showtime, despite the fact that 0:13:11.000 --> 0:13:14.080 we're talking about a six hour window when most people 0:13:14.120 --> 0:13:18.920 wouldn't be watching television anyway. Um that that part didn't matter. 0:13:19.080 --> 0:13:23.560 So very interesting that this battle happened. It was another 0:13:23.600 --> 0:13:26.000 expensive battle, but an important one. As we all know, 0:13:26.080 --> 0:13:27.920 Star Wars one of the most important pieces of art 0:13:28.400 --> 0:13:33.400 created in the history. There's like the Mona Lisa Star 0:13:33.480 --> 0:13:37.960 Wars David, that's the order it goes in. So three 0:13:38.160 --> 0:13:42.560 also was there another amazing piece of art premiered on 0:13:42.720 --> 0:13:46.439 HBO and original program aimed at children. Yeah, Jim Henson's 0:13:46.480 --> 0:13:49.599 Fraggle Rock yep down in Fraggle Rock. So I was 0:13:49.679 --> 0:13:53.400 a huge Fraggle Rock fan back in the day. Um. 0:13:53.480 --> 0:13:55.959 They actually came to dragon Con and we covered the 0:13:56.000 --> 0:13:58.640 dragon Con parade. We actually shut this coverage. Me and 0:13:58.640 --> 0:14:01.040 Ben Bowen and Lauren You were there and we did 0:14:01.080 --> 0:14:03.880 it like Macy's Thanksgiving Day Parade style. It never it 0:14:04.000 --> 0:14:06.240 never saw the light of day, probably because there were 0:14:06.280 --> 0:14:09.000 long stretches where nothing was happening. We we we haven't 0:14:09.000 --> 0:14:13.800 had anyone had time to edit the whole thing really long. Yeah, 0:14:13.840 --> 0:14:16.200 but were in it. They were in it. And there 0:14:16.360 --> 0:14:18.360 is a photo gallery that I did. I was running 0:14:18.360 --> 0:14:21.200 a still camera through the parade and so and and 0:14:21.240 --> 0:14:24.160 she she waved at me. Yeah. I got choked up. Yeah, 0:14:24.200 --> 0:14:26.640 I got choked up watching the Fraggles. I mean, I'm 0:14:26.640 --> 0:14:28.800 not I'm not embarrassed to admit it. The Fraggles are 0:14:28.800 --> 0:14:30.280 meant a lot to be I'm getting a little tiory 0:14:30.360 --> 0:14:33.400 right now. In fact, all right, Well that was the 0:14:33.440 --> 0:14:37.080 first segment of HBO Story Part two. We've got more 0:14:37.160 --> 0:14:40.160 chapters here. The Game of Thrones, I think I guess 0:14:40.200 --> 0:14:51.000 we'll find out, but first let's take a quick break. Now, 0:14:51.080 --> 0:14:54.720 Jim Henson had already had a relationship with HBO. HBO 0:14:54.760 --> 0:14:57.680 had produced a couple of years earlier a Christmas special, 0:14:57.680 --> 0:15:01.280 immitt Otter's jug Band Christmas. So now Jim Hinson had 0:15:01.320 --> 0:15:04.720 the the freedom to create this entire children's series, which 0:15:04.800 --> 0:15:09.080 lasted five seasons, and it ended up being a big success. 0:15:09.120 --> 0:15:12.560 It was one of the few breakaway successes of children's 0:15:12.600 --> 0:15:15.920 programming on HBO. A lot of the other programming UH 0:15:16.080 --> 0:15:19.080 people liked the idea of but no one ever bothered 0:15:19.120 --> 0:15:22.480 to watch, so Fraggle Rock was not among that. That 0:15:22.600 --> 0:15:25.840 was an incredibly popular show, in fact, so popular that 0:15:26.160 --> 0:15:30.280 HBO would end up making other versions of Fraggle Rock 0:15:30.480 --> 0:15:33.880 for other countries, and some of them would have their 0:15:33.880 --> 0:15:37.560 own version of Doc and Sprocket that wouldn't necessarily be 0:15:37.600 --> 0:15:39.840 called Doc and Sprocket, and they would be different people, 0:15:39.840 --> 0:15:41.280 like the I think in England it was like a 0:15:41.360 --> 0:15:45.720 lighthouse keeper who was really crabby. But anyway, they would 0:15:45.760 --> 0:15:48.320 also be dubbed into different languages, so everyone had their 0:15:48.320 --> 0:15:50.960 own version of Fraggle Rock, which was kind of cool. 0:15:51.000 --> 0:15:53.840 It wasn't just a you know, it wasn't just switching 0:15:53.840 --> 0:15:56.520 out the soundtrack. It was actually Taylor made to These 0:15:56.600 --> 0:15:58.960 Nations and another series that premiered that year, and I 0:15:59.000 --> 0:16:02.600 remember the series too, was not necessarily The News, which 0:16:02.640 --> 0:16:05.240 was kind of a news parody sketch comedy show. It 0:16:05.320 --> 0:16:08.800 was the news thing was kind of the the conceit 0:16:09.520 --> 0:16:12.680 the book ends for these various sketches that may or 0:16:12.680 --> 0:16:15.680 may not be very loosely connected, right, And it was 0:16:15.760 --> 0:16:19.360 kind of Brian's very first television writing gig also uh, 0:16:19.520 --> 0:16:23.200 not consistently very good, but but one of the examples 0:16:23.280 --> 0:16:26.960 of HBO getting into original programming, which is again they 0:16:27.000 --> 0:16:30.880 started looking at how to differentiate themselves from the showtimes 0:16:30.880 --> 0:16:33.920 of the world, and these exclusivity deals, like we said, 0:16:34.080 --> 0:16:38.720 could be really really expensive, so maybe making original programming 0:16:38.800 --> 0:16:41.760 would have been a better approach. Now they learned that 0:16:41.880 --> 0:16:45.120 making good original programming is very tricky. It might not 0:16:45.160 --> 0:16:48.200 be expensive, but it's very hard to do, and getting 0:16:48.200 --> 0:16:52.200 people to pay attention is also sometimes tricky. Right. Yeah, 0:16:52.200 --> 0:16:54.840 Sometimes they would make an amazing show that the critics 0:16:54.920 --> 0:16:57.720 loved in nobody watched. We will talk about several of 0:16:57.760 --> 0:17:01.920 those in our third episode. But meanwhile, twelve years after 0:17:01.960 --> 0:17:05.160 its inception, HBO finally got their own offices. Yeah, they 0:17:05.200 --> 0:17:09.000 moved over into a building on Avenue, and it had 0:17:09.040 --> 0:17:13.160 the nickname the flash Cube. All right, kids years ago, 0:17:13.640 --> 0:17:17.840 like in the eighties, cameras which had film in them, 0:17:18.160 --> 0:17:22.480 none of this digital stuff also had flash you know, flashes, 0:17:22.520 --> 0:17:25.800 like a separate flash unit that you had to attach 0:17:25.840 --> 0:17:28.840 to the top little cube that would flash light so 0:17:28.920 --> 0:17:31.080 you could get some light on that image you're trying 0:17:31.119 --> 0:17:34.000 to capture onto film. That's why it was called the 0:17:34.000 --> 0:17:36.359 flash cube because the building looked like one. So this 0:17:36.480 --> 0:17:39.040 building that looked like something you've never seen looked exactly 0:17:39.080 --> 0:17:43.000 like just just like that thing. So now you had 0:17:43.560 --> 0:17:46.679 a building where the actual departments could all sit together. 0:17:47.160 --> 0:17:50.159 The divisions were no longer divided. They could all be 0:17:50.240 --> 0:17:54.040 in a cohesive unit. So that amazing camaraderie they had 0:17:54.080 --> 0:17:56.280 developed back at Time Incorporated, when they had this kind 0:17:56.280 --> 0:18:00.800 of startup mentality went away. What's completely ruined. Yeah, suddenly 0:18:00.800 --> 0:18:05.360 they were physically closer and yet emotionally so distant. Um. 0:18:05.400 --> 0:18:07.119 It turned out that HBO was starting to become more 0:18:07.119 --> 0:18:10.000 of a business, less of this kind of startup entrepreneur 0:18:10.119 --> 0:18:14.240 approach and I had more of a of a corporate structure. Yeah, 0:18:14.280 --> 0:18:17.680 And it also was when HBO started to notice that 0:18:18.400 --> 0:18:21.320 growing as a business was going to get very difficult, 0:18:21.359 --> 0:18:24.320 they did what was called hitting the wall. The wall 0:18:24.320 --> 0:18:27.920 in this case was saturation. You had a saturation point 0:18:28.000 --> 0:18:31.119 where cable had pretty much entered all the markets that 0:18:31.200 --> 0:18:33.679 was gonna go into. So that meant that you no 0:18:33.720 --> 0:18:37.320 longer could expect to suddenly have access to twenty thousand 0:18:37.320 --> 0:18:41.919 new subscribers potential new subscribers because someone finally built the 0:18:41.920 --> 0:18:44.959 infrastructure out to this one region. Now all the regions 0:18:44.960 --> 0:18:47.159 pretty much had cable, so there were not going to 0:18:47.280 --> 0:18:50.400 be any of these these gift baskets of potential customers 0:18:50.440 --> 0:18:52.640 just arriving at HBO. They were gonna have to work 0:18:52.680 --> 0:18:55.280 for it. And also on top of that, they had 0:18:55.280 --> 0:18:58.680 a churn rate going on, right. So churn rate is 0:18:58.720 --> 0:19:03.000 when you lose a certain number of customers over a 0:19:03.040 --> 0:19:05.639 course of a general amount of time. So there's was 0:19:05.680 --> 0:19:10.280 about two per month back in which means that in 0:19:10.359 --> 0:19:13.240 order to just stay even, you have to grow by 0:19:13.280 --> 0:19:16.320 two percent, right to to just maintain the same number 0:19:16.320 --> 0:19:17.960 of customers from the beginning of the month to the 0:19:18.040 --> 0:19:19.840 end of the month. If you want to grow beyond that, 0:19:19.880 --> 0:19:21.960 then obviously you have to get more than two percent 0:19:22.119 --> 0:19:25.240 new customers to replace the two percent who who left. Now, 0:19:25.320 --> 0:19:27.560 some of the people who left they left because they 0:19:27.560 --> 0:19:30.600 were relocating and eventually maybe they come back, but some 0:19:30.680 --> 0:19:32.359 of them were just saying, oh, I don't want to 0:19:32.480 --> 0:19:35.560 have this expense anymore. So you had to convince them, hey, 0:19:35.840 --> 0:19:38.680 we're worth the money, or you had to convince new people, hey, 0:19:38.680 --> 0:19:40.640 we're worth the money. And now there were fewer new 0:19:40.680 --> 0:19:43.640 people to get access to. So this was a very 0:19:43.680 --> 0:19:48.080 scary time at HBO. You had this young company that 0:19:48.200 --> 0:19:52.120 had been used to this incredible growth suddenly realizing, oh, 0:19:52.240 --> 0:19:54.200 things are not going to be as easy anymore. We're 0:19:54.280 --> 0:19:57.679 not going to have this essentially blank check that we 0:19:57.720 --> 0:20:00.399 can hand out for these exclusivity deals. We're not going 0:20:00.440 --> 0:20:03.360 to have this this endless line of new customers coming 0:20:03.359 --> 0:20:05.280 in through the door. What are we gonna do? And 0:20:05.280 --> 0:20:07.040 in fact, one of the first things they had to 0:20:07.080 --> 0:20:10.600 do was layoff about a hundred and twenty five employees, 0:20:10.640 --> 0:20:13.200 which was the first time in HBO's history that people 0:20:13.240 --> 0:20:16.640 had been let go like that. Also, around the same time, 0:20:16.640 --> 0:20:20.240 the VCR became a thing, and that was a boy 0:20:20.320 --> 0:20:24.520 talk about a big bite out of the business. So 0:20:25.440 --> 0:20:27.719 keep in mind, remember this is the time when HBO 0:20:27.960 --> 0:20:31.960 their main purpose was to create way for people to 0:20:32.000 --> 0:20:35.000 watch these movies that were uncut and uncensored that wouldn't 0:20:35.040 --> 0:20:38.320 be carried on broadcast television. But now, with the birth 0:20:38.359 --> 0:20:41.080 of the VCR and the growth of the home video market, 0:20:41.119 --> 0:20:42.920 where you could go to a rental store and rent 0:20:42.960 --> 0:20:45.600 a movie, you can get access to all sorts of 0:20:45.680 --> 0:20:49.840 movies beyond the what we'll call the playlist that HBO 0:20:49.920 --> 0:20:52.760 had access to. Remember, HBO is paying licensing fees to 0:20:52.760 --> 0:20:55.040 be able to show these movies, so they don't have 0:20:55.119 --> 0:20:57.560 licenses for every movie. They have to pick and choose, 0:20:57.560 --> 0:21:00.600 and sometimes they pick before they even know what the 0:21:00.640 --> 0:21:02.320 movie is going to be like, and sometimes they lose 0:21:02.359 --> 0:21:04.160 out on that. Oh sure, and they can only air 0:21:04.280 --> 0:21:06.200 so many things at a time, They can only pay 0:21:06.280 --> 0:21:07.879 to keep so many things on the air at a 0:21:07.880 --> 0:21:10.719 single time, and whatever they happen to have might not 0:21:10.760 --> 0:21:14.240 be what you feel like watching. Once once stores started 0:21:14.359 --> 0:21:18.920 carrying rentable VHS tapes, it was I mean for for 0:21:19.520 --> 0:21:22.080 younger listeners, I mean, like I have a hard time 0:21:22.119 --> 0:21:25.680 imagining this and I remember VHS tapes. I remember all 0:21:25.680 --> 0:21:28.359 of that very clearly, and it still sounds crazy to 0:21:28.400 --> 0:21:30.280 me that you that there was a time when you 0:21:30.320 --> 0:21:33.080 couldn't just watch whatever you wanted. Yeah. Now, you would 0:21:33.119 --> 0:21:35.120 go into the store and you would hope that that 0:21:35.240 --> 0:21:39.080 one copy of Young Einstein was still available, because you 0:21:39.080 --> 0:21:41.639 know what a breakaway hit that was. Um, hey, that 0:21:41.680 --> 0:21:44.879 was an important film. Hey, yeah, who's serious one of 0:21:44.880 --> 0:21:47.680 my heroes. Okay, I'm not don't take any thing away 0:21:47.720 --> 0:21:50.879 from the series, but yeah, just just the fact that 0:21:50.920 --> 0:21:52.959 you go into the store, you know, and hope that 0:21:53.000 --> 0:21:55.120 the thing is the movie that you want is there. 0:21:55.400 --> 0:21:57.840 There was an illusion that you had a more choice 0:21:57.960 --> 0:22:01.560 with the home video market. Now, the true was dependent 0:22:01.600 --> 0:22:05.080 upon how many copies of a certain movie the rental 0:22:05.119 --> 0:22:07.320