CBS Corp. is taking a big step into the future of TV distribution next month with the launch of Showtime as a broadband-only subscription offering. CBS Corp. chief Leslie Moonves spoke with Variety on Wednesday about the long gestation process, plans for a marketing blitz, and his hope that cable operators will embrace the potential of OTT to complement their broadband services.
What was the toughest calculation you made in getting to today’s formal announcement? You’re launching initially with Apple, but you will add others soon.
Leslie Moonves: We’ve been working on this obviously for a few years. It’s been a constant source of comment in our company. Showtime is in almost 24 million homes. So how do we expand? How do we get out there to more people? Obviously a lot of this is targeted to the 10 million broadband-only homes out there. And we think we can target to people who don’t get Showtime through their basic cable package. By the time someone signs up for cable and they check off on the HBO package, they’ve already spent 120 bucks before they get to Showtime.
What has the reception been among traditional MVPDs?
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We want to offer (consumers) a different proposition. Obviously we were affected by HBO’s announcement (of HBO Now). They’ve done very well. Clearly, it’s an idea that is accepted. But by no means are we wanting to go around our existing partners. We want them to participate with us and have a different way of getting Showtime to consumers. There’s another 90 million homes out there that we would like to get to.
So have you had conversations with the biggest cable operators about launching this service?
I haven’t, but (Showtime chairman) Matt Blank and others have. We’ve contacted everybody to tell them what our intentions were. I do believe they’ll all be on board with this. Everybody’s business is changing so darn rapidly. Everybody’s trying to get their hands around what does all of this mean for our business. Our goal at CBS, whether as a premium cable network or a broadcast network, is to make our programming available to as many people as possible. … I did a talk with graduate students at USC recently and they are really broadband only, and they are dying to get Showtime. They know about “Homeland,” “Ray Donovan” and “Shameless” and they are anxious to get it.
You launched the CBS All Access OTT service last October. What have you learned from the experience so far?
We’re extremely pleased with how it’s gone. In the OTT world, you have to get a lot of people to try it out. Not all of them stay. Big events drive the sign-up initially. What we’ve found that is interesting is that the majority of people are there for catch-up viewing, not the live (streaming) feature. That’s great and it’s an important part of All Access, but a majority of people want to watch all of the episodes from last season of “The Good Wife” — things like that.
We thought the balance would be somewhat different. I thought live would be a bigger piece of (usage). Clearly it’s impossible to ignore the success of Netflix and of Hulu. The online world is becoming a more and more important part of entertainment. By no means do I expect people to leave broadcasting in droves or the traditional way of getting Showtime. This is a great new alternative.
How did you come to the $10.99 pricetag for Showtime? That’s in line with the price charged by most MVPDs, right? You’re a buck more than Netflix but a few dollars less than HBO Now.
We had a lot of conversations about pricing and where we are in relationship to the other players. We did a lot of research about what would be effective in comparison with all the others out there.
Will you do a big marketing push beyond your own air?
There will be an off-air and an on-air component. The advantage Showtime has that the others don’t is that they also belong to a broadcast network. There will be great opportunity for us to promote this service. Once again, we’re in business with Apple and other partners that have major plans to market us.
Will you specify any other partners?
We’re going to have some announcements in the very near future about some of the other players. There are numerous conversations going on right now.
A year from now, what level of subscribers would you consider to be a successful launch for this service?
We’re not going to make predictions or projections — as HBO has wisely done. The good news is the cost basis is rather low. We won’t need millions and millions of initial subscribers to make it successful. But we’re not going to project just yet.