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Here's How Time Warner's HBO Plans to Take On Netflix

By Daniel B. Kline – Feb 19, 2016 at 8:21PM

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The company wants to restore its past glory and has a bold plan to do so.

Before Netflix (NFLX -1.78%) became a player in high-quality original content, Time Warner's (TWX) HBO was the standard-bearer when it came to top-quality non-network shows.

The company used the tag line, "It's not TV; it's HBO" and that actually meant something. Yes, some people subscribed to the premium channel for its movie library or its tawdry adult fare, but many were drawn by high-end shows like The Sopranos, Six Feet Under, Sex and the City, True Blood, and countless others.

Since Netflix exploded into the original content space, it has stolen some of HBO's thunder. Even though HBO, which now also offers a stand-alone streaming service, has Game of Thrones, Girls, and Last Week Tonight with John Oliver, just to name a few, still airing, it sometimes falls behind Netflix when it comes to buzz.

But that may soon change as HBO CEO Richard Plepler has a clear plan to reclaim his company's crown when it comes to being the place to go for top-tier original programming.

What is HBO doing?
In recent months, the Time Warner company has gone on a bit of a shopping spree. Following the blueprint it used to hire Oliver after his successful stint filling in for Jon Stewart as host of The Daily Show, the network has locked up Internet and television sports personality Bill Simmons for a new talk show, while also signing Stewart to create digital content (and more if he wants). HBO has also snagged first-run rights for new episodes of Sesame Street and has a partnership with Vice for a daily news programs.

It's all part of a grand plan, according to Plepler.

"We're looking to build addicts," Plepler told AdWeek. "Some people are addicted to Girls, some to Silicon Valley. Some will be addicted to Vinyl. Some are addicted to Thrones, and some will be addicted to Sesame Street. What we're trying to do, across a wide variety of viewers and genres, is to capture people's imaginations and make HBO integral to their life. So anytime we have a chance to bring more great entertainment to the network, we're going to do it. It's all about a mosaic of great entertainment."

It sounds simple, but in the crowded television space creating addictive programming has not proven easy. Netflix has an edge because it has made each new show an event, but HBO is playing it smart here. It's not simply lining up quality shows, it's actually working with known quantities.

Stewart and Simmons have proved that they have an audience that will almost certainly follow them. Sesame Street is an established brand that has thrived for decades and Vice has proved that it has an audience. Even when it makes an original show like Vinyl, HBO is hedging its bets by working with Mick Jagger and Martin Scorsese.

Vinyl is set in the 1970s and Mick Jagger is serving as one of its producers. Image source: HBO.

It's all about buzz
Netflix managed to take some of HBO's cachet by simply being the new kid in town. That luster will fade in time or as soon as the streaming service releases a few shows that fail to connect with viewers. But, HBO's CEO does not necessarily think his company's success requires a misstep from its chief rival.

"In this most competitive ecosystem, I think we have more wide-ranging, high-quality programming in more different genres on HBO than we've ever had in our history. ... So, in an age of competition, I think we've even elevated our game," Plepler told AdWeek.

Basically, the CEO is saying that in the face of stronger competition, it's time for the original pay service built on quality programming to step up its game. His strategy for doing so seems sound, and while HBO will not make people forget about Netflix, it should get more people talking about its own brand of "not TV."

Simmons, Stewart, Vice, and even Big Bird & Co. can get people talking. As long as they deliver the goods -- and history suggests that they will -- HBO should be a stronger player that delivers on Plepler's goal of building addicts.

Daniel Kline has no position in any stocks mentioned. He pays for both Netflix and HBO and is currently watching Daredevil and Last Week Tonight. The Motley Fool owns shares of and recommends Netflix. The Motley Fool recommends Time Warner. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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