At its investor event last week, WarnerMedia revealed more details about HBO Max launching in May 2020. CEO John Stankey acknowledged that the company will have to manage the decline of its assets (cable and satellite revenue) in order to grow the new streaming service, which is projected to turn a profit in 2025.
HBO is embracing the 3 Cs: cannibalization, customer relationships, and competition and going all-in on streaming.
Evan Shapiro, President at National Lampoon, shared a great post on Linkedin likening the strategy to Kimberly-Clark’s “burn-the-mills” approach.
The Kleenex Axiom by Evan Shapiro
After more than 100 years as primarily a B2B producer of paper in mills, Kimberly-Clark began a transition to consumer paper-goods, with the historic success of Kleenex.
Yet, the VAST majority of its revenue still came from turning trees into paper, for magazines, & newspapers.
But management, led by CEO Darwin Smith, did a LOT of long term strategery, and decided wholesale paper for periodicals was not their future (kinda prescient). Making & selling consumer paper goods (Paper Towels, TP, Tissues, Diapers) – products that would ALWAYS be needed – was.
They went all in. They sold off their namesake, the majority of their revenue. They “burnt the mills.”
The result: In 20 years, they owned their top rival (Scott), became the #1 consumer paper goods company on earth, and out-performed the Dow by 4X.
THIS is the lesson media companies need RIGHT NOW.