Focus on programming
Time Warner’s (TWX) HBO original programming, which includes series like Game of Thrones, has so far been a success for the company. The company continues to aggressively expand its programming for HBO with new shows like Westworld, Insecure, High Maintenance and Divorce.
Time Warner stated at the company’s fiscal 3Q16 earnings call that it believes that quality content will drive the demand among both its HBO Now subscribers and MVPD (multi-channel video programming distributors). We should note that HBO played an important role in prompting AT&T (T) to acquire Time Warner. The company further stated at its fiscal 3Q16 earnings call that it expects its subscription revenue for HBO to rise in fiscal 4Q16 and in 2017. The reason for this optimism is because many of HBO’s affiliate fee agreements are coming up for renewal in fiscal 4Q16 and in fiscal 2017.
HBO’s digital platforms
In July 2016, Time Warner announced that HBO’s programming viewership is being driven mainly by digital platforms, including HBO On Demand, HBO GO, and HBO Now. The company also stated at its fiscal 3Q16 earnings call that it has observed a “substantial growth” in subscribers for HBO Now and expects this to continue with all its OTT (over-the-top) platforms, including HBO GO.
HBO in fiscal 3Q16
In fiscal 3Q16, subscription revenues comprised 88% of HBO’s total revenues of $1.4 billion. When it comes to content licensing revenues, the company continues to see a robust demand for its programming, especially in international markets like Latin America and Nordic markets. In fiscal 3Q16, excluding the impact of currency fluctuations, content licensing revenues in international markets rose by “double-digits.”