Time Magazine 2015 Annual Report Download - page 23

December 31, 2015, Home Box Office had approximately 49 million domestic premium pay subscribers, including HBO
NOW, and HBO was the most widely distributed domestic multi-channel premium pay television service.
Subscribers to the HBO and Cinemax services can view HBO and Cinemax programming on an HBO or Cinemax
multiplex television channel and through Home Box Office’s on-demand products, HBO On Demand and Cinemax On
Demand, and its HBO GO and MAX GO streaming video-on-demand platforms. The programming on HBO GO and MAX
GO includes most seasons of HBO’s and Cinemax’s original series, as well as feature films, HBO mini-series and films,
sports programming, documentaries, comedy and music specials, bonus features and behind-the-scenes extras. Home Box
Office’s agreements with its domestic affiliates are typically long-term arrangements that provide for annual service fee
increases and marketing support. While fees to Home Box Office under affiliate agreements are generally based on the
number of subscribers served by the affiliates, the relationship between subscriber totals and the amount of revenues earned
depends on the specific terms of the applicable agreement, which may include basic and/or pay television subscriber
thresholds, volume discounts and other performance-based discounts. Marketing and promotional activities intended to retain
existing subscribers and acquire new subscribers may also impact revenue earned. In addition to offering HBO as part of
their multichannel video subscription packages, some affiliates are offering their subscribers smaller bundles of networks that
include broadcast and/or select basic cable networks and HBO.
HBO NOW is available across a wide variety of platforms and devices, including through digital distributors such as
Amazon, Apple, Google and Roku as well as some of Home Box Office’s traditional affiliates. Home Box Office plans to
continue to expand the number of distribution partners and supported platforms and devices for HBO NOW. HBO NOW is
generally offered with a free trial period, and a user generates revenues for Home Box Office and is considered a subscriber
after the end of the free trial period. Like HBO GO, HBO NOW offers most seasons of HBO’s original series as well as
feature films, HBO mini-series and films, sports programming, documentaries, comedy and music specials, bonus features
and behind-the-scenes extras.
International Premium Pay, Basic Tier Television and Streaming Services
Outside the U.S., Home Box Office generates revenues primarily from providing its programming to international
affiliates. Unique, country-specific HBO- and Cinemax-branded premium pay, basic tier television and streaming services
are distributed in more than 60 countries in Latin America, Asia and Europe. In Asia and Europe (excluding the
Netherlands), Home Box Office operates through consolidated, wholly-owned subsidiaries. In Latin America and the
Netherlands, Home Box Office operates through unconsolidated joint ventures. Home Box Office had approximately
82 million international premium pay, basic tier television service and broadband-only subscribers at December 31, 2015,
including subscribers through Home Box Office’s unconsolidated joint ventures. HBO GO was available to HBO premium
pay television subscribers in over 30 countries and territories at December 31, 2015, and Home Box Office plans to make
HBO GO available to HBO premium pay television subscribers in additional countries and territories in 2016.
Home Box Office operates a direct-to-consumer streaming service in the Nordic region. In addition, in 2015, HBO Latin
America launched a streaming service distributed by a third party in Colombia and announced plans to launch streaming
services in other parts of Latin America and the Caribbean. In January 2016, HBO Latin America launched a streaming
service distributed by a third party in Mexico. Also, in January 2016, Home Box Office announced that it plans to launch in
the fourth quarter of 2016 both a direct-to-consumer streaming service and a streaming service offered exclusively through a
third-party distribution partner in Spain and in March 2016 announced that it plans to launch streaming services in Brazil and
Argentina in 2016. Home Box Office expects to expand the distribution of streaming services to additional territories around
the world.
Home Entertainment and Content Licensing
Home Box Office also generates revenues from the exploitation of its original programming through multiple other
distribution outlets. Home Box Office sells its original programming in both physical and digital formats in the U.S. and
various international regions through a wide variety of digital storefronts and traditional retailers. Significant home
entertainment releases in 2015 included Game of Thrones: The Complete Fourth Season,Silicon Valley: The Complete First
Season,Veep: The Complete Third Season and Boardwalk Empire: The Complete Fifth Season and The Complete Series.In
addition, Home Box Office also licenses some of its programming to the Amazon Prime SVOD service.
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