TARGET MARKET OF THE IT’S NOT T.V. IT’S HBO CAMPAIGN

With its huge base of subscribers, HBO had a diverse viewing audience. For that reason the ‘‘It’s Not T.V. It’s HBO’’ campaign did not target a narrow demographic group. HBO hoped to reach all segments of the American consumer market from ages 18 to 49. The image ads conceived by BBDO were considered an ideal means to reach this broad-based target. Because the spots did not focus on one aspect of HBO’s programming but instead tried to hone the overall image of the channel, the campaign could appeal to all viewers. ‘‘The campaign tries to convey that we are a total entertainment package—that there is something for everyone,’’ said Chris Donlay, HBO’s manager of corporate affairs. ‘‘We were not looking for a market share or Nielsen ratings,’’ said Nancy Parmet, HBO’s vice president of marketing, who oversaw the ‘‘It’s Not T.V. It’s HBO’’ campaign. ‘‘We were looking to break through the clutter.’’ USA Today acknowledged the competitive and multifaceted state of the entertainment industry when it declared that to thrive ‘‘HBO must remain top-of-mind with consumers.’’

HISTORICAL CONTEXT OF THE IT’S NOT T.V. IT’S HBO CAMPAIGN

In its early days HBO primarily showed Hollywood movies and high-profile sporting events such as boxing. In the mid-1980s, however, HBO began to emphasize original productions, which included critically acclaimed made-for-HBO movies such as And the Band Played On and From the Earth to the Moon, comedy shows such as The Larry Sanders Show, and dramatic series such as Oz.
The shift toward original programming was fueled in part by the arrival of the VCR, which enabled viewers to rent at their convenience the same Hollywood movies broadcast by HBO. By the mid-1990s the network also offered original documentary films, animation specials, children’s and family programming, extensive sporting events and shows, and coverage of contemporary music concerts. At the time of the ‘‘It’s Not T.V. It’s HBO’’ campaign, 30 percent of HBO’s programming was original. By 1997 HBO reached roughly 23 million subscribers, approximately one-fourth of the viewing public. That same year it also won 19 Emmy Awards for its original films and shows, the most ever garnered by a cable television channel.
HBO’s programming was recognized for being innovative and daring. The New York Times lauded the channel’s ‘‘willingness to take a chance on unconventional programming and to allow writers and directors to operate with minimal interference.’’ HBO produced movies dealing with such issues as abortion, AIDS, and racism. As a pay television channel independent of advertisers’ pressures and demands, HBO had the flexibility for controversial and bold programming. ‘‘We’re not selling ads,’’ Jeffrey Bewkes, the company’s CEO, told BusinessWeek. ‘‘We’re not selling our audience to advertisers. We’re selling our programming service to you.’’ HBO’s mandate, and the key to its survival and profitability, was to continue to expand its subscriber base.
Like the cable industry as a whole,HBOwas subject to ‘‘churning,’’ the phenomenon of tremendous fluctuations among subscribers. Each month a huge number of viewers disconnected their HBO service for a variety of reasons. Some signed up for a specific event, such as a high-profile tennis tournament, and then disconnected the next month. Others subscribed to HBO only during the winter months, when they knew they would spend more time indoors, and canceled the service in the spring and summer. Some lost their jobs or suffered other financial hardships, and some disconnected when they moved. Despite the constant drain of viewers, however, an even greater percentage signed up either as first-time or repeat subscribers. There were other factors that made it challenging for HBO to attract and retain subscribers. Potential customers had a wide array of entertainment choices. Network and cable television, premium cable channels like HBO, Showtime, and the Disney Channel, and video rentals, movie theaters, and even chat rooms on the Internet—all vied for the consumer’s entertainment time and dollars. It was in this competitive situation that HBO developed the ‘‘It’s Not T.V. It’s HBO’’ campaign. The goal was not only to distinguish HBO from its competitors but also to reflect the originality of much of HBO’s programming. The commercials, with their quirky humor, compelling plots, and high-tech execution, were intended to encapsulate the strengths of HBO and keep the channel prominent in the consumer’s mind.

OVERVIEW OF THE IT’S NOT T.V. IT’S HBO CAMPAIGN

Founded in 1972, Home Box Office (HBO) was the oldest and largest premium pay television channel in the United States. Unlike network television and most other cable channels, which raised revenue by selling advertising spots during programming, HBO relied exclusively on subscribers’ monthly fees to generate income. As consumers’ entertainment choices multiplied dramatically over the years, HBO strove to construct a distinctive niche for itself and to stand out amid competitors, which included other television channels, movies, home video rentals, and the Internet. In 1996 HBO launched an innovative $60 million television advertising campaign in an effort to draw attention to itself and to strengthen its brand recognition. The spots, conceived by ad agency BBDO New York, sought to reflect the spirit and the programming of HBO. Instead of previewing upcoming events or providing a traditional ‘‘tune-in’’ message, the ‘‘It’s Not T.V. It’s HBO’’ campaign attempted to present the viewer with a sample of HBO’s programming. The five spots making up the campaign deliberately strove to be humorous, creative, and original.
According to the company, based on surveys prior to and following the launch of the campaign, ‘‘It’s Not T.V.
It’s HBO’’ achieved its goal of increasing the network’s brand image and awareness among consumers. Further, the campaign earned praise from the media and advertising industries. ‘‘Chimps,’’ the first commercial of the campaign, was awarded the first ever commercial Emmy. In 1997 the ‘‘Chimps’’ spot received a Gold Clio Award in the Television/Cinema category. As the campaign continued, its focus shifted, and the slogan evolved into the network’s mantra, setting HBO apart not only from other pay television channels but also from all TV networks. The Cable& Telecommunications Association for Marketing (CTAM) named the campaign its Hall of Fame winner in 2003

OUTCOME OF THE IT HAPPENS AT THE HILTON CAMPAIGN

The ‘‘Welcome to Hollywood’’ campaign was well received and resulted in numerous honors. Not only did the campaign garner several awards at the 40th annual Clio Awards Festival but the radio portion of the campaign received a gold award at the One Show, and several of the spots were recognized at the national Addy Awards. ‘‘Action’’ was named on Adweek’s ‘‘Best Spots of the Year—1998’’ list, and the campaign took honors at the 46th International Advertising Festival in Cannes, France. Cliff Freeman was selected as the Agency of the Year by both the Clio Awards and SHOOT. Hollywood Entertainment managed to open about one store per day in 1998, and by mid-1999 there were more than 1,300 Hollywood Video stores in 43 states;
Hollywood Video’s market share was about 10 percent. For the quarter ended September 30, 1998, Hollywood reported revenue of $184.1 million, a 48 percent increase from the same period in 1997. Same-store sales enjoyed an increase of 7 percent. For the first quarter of 1999 the company reported revenue of $260 million, up 53 percent from the same period in 1998. Same-store sales jumped by 18 percent, and net income climbed 92 percent. In October 1998 Hollywood purchased
Reel.com, Inc., a leading Web-based video retailer, thus expanding its distribution channels. As the company’s Web site indicated: ‘‘The past success of Hollywood Video is apparent and the future is bright. If the Hollywood Video story were a movie, the final frame of this action packed adventure would not read ‘The End,’ but rather ‘To Be Continued . . . ’ ’’

MARKETING STRATEGYWELCOME TO HOLLYWOOD" CAMPAIGN

By the time Hollywood Video launched its ‘‘Welcome to Hollywood’’ campaign in mid-1998 the company had a strong first quarter under its belt—it had opened 88 new stores and reported revenue of $170 million, a 54 percent jump from the first quarter of 1997. The company also launched a new store design that emulated the allure of Hollywood to a greater degree—the bright lights and monitors were accompanied by Hollywood memorabilia and photos of movie stars. The campaign’s ads appeared in major U.S. markets and spotlighted Hollywood Video’s new releases, promotions, guarantee policies, and, as Wattles said in the Portland Oregonian, ‘‘that we love movies. . . . We are Hollywood.’’ Arthur Bijur, Cliff Freeman’s executive creative director, explained in SHOOT that the campaign was designed to show consumers that Hollywood Video ‘‘really gets Hollywood and everything about it, . . . to show that it’s more a place which is really all about movies.’’ To accomplish this, Bijur said, the spots focused on things that were uniquely and utterly Hollywood.
‘‘Action’’ was set in the action/adventure section of a Hollywood Video store. An older cowboy dressed in black attempted to teach two male employees how to throw a fake punch as customers looked on in curiosity. The employee practicing to hit ran into some trouble with the maneuver. The cowboy explained, ‘‘That was a good start, but we don’t actually want to hit the person.’’ The puncher tried again but was unsuccessful. On the third punch the second employee slumped to the ground as the cowboy exclaimed, ‘‘That was so close!’’ Another television spot, ‘‘Don,’’ lampooned movie trailers and featured Don LaFontaine, who actually provided voiceovers for many trailers. In the ad a couple approached the counter with a video and asked the employee to tell them a bit about the movie. The employee knocked on a cabinet underneath the counter and LaFontaine, dressed in a suit, emerged. The employee handed him the tape, and LaFontaine read in his instantly recognizable voice:
‘‘From Flesh to Steel. From Blood to Blade. From Man to Mutant. Evil has a new enemy. Justice has a new weapon. And the world . . . has a new hero.’’ LaFontaine then handed the tape back to the employee and crawled back into the cabinet. Cliff Freeman art director Matt Vescovo explained in SHOOT that ‘‘the whole idea is that Hollywood Video is totally Hollywood, and one of the things we associate with Hollywood is this guy’s voice. So what better guy is there to describe a movie to customers than this guy who’s an authority and knows everything about every movie and everybody has heard his voice a million times?’’ Other spots included ‘‘Birds,’’ which parodied Alfred Hitchcock’s movie of the same name, ‘‘Musical,’’ which featured two male employees dancing and singing about the store’s five-day rental policy, and ‘‘Credits,’’ which spoofed the final credits of a movie. The ‘‘Welcome to Hollywood’’ campaign also included several radio spots. All followed the ‘‘Sixty Second Theater’’ theme and provided a humorous glimpse into the plots of such popular movies as Tomorrow Never Dies, As Good As It Gets, Scream 2, and Good Will Hunting. In the ads the announcer began, ‘‘Hollywood Video presents Sixty Second Theater, where we try, unsuccessfully, to pack all the action and drama of a two-hour Hollywood production into 60 seconds.’’ A comical take-off of the plot ensued, complete with actors impersonating the celebrity voices. The Good Will Hunting spot ended with the announcer stating, ‘‘If this doesn’t satisfy your urge to see Good Will Hunting, and we can’t say we blame you, then rent it today at Hollywood Video, where Good Will Hunting is guaranteed to be in stock, or next time it’s free.’’

COMPETITION OF THE "WELCOME TO HOLLYWOOD" CAMPAIGN

Generating three times as much revenue as the theatre arena, the home video market was extremely lucrative and, as a result, highly competitive. Number-one ranked Blockbuster Inc. (previously Blockbuster Entertainment Corp.), which was three times the size of Hollywood Video, had dominated the field for a decade and at the end of 1997 boasted 4,000 stores in the United States and 6,000 globally. Purchased by entertainment giant Viacom Inc. in 1994, Blockbuster enjoyed a commanding market share of 25 percent at the beginning of 1998. Hollywood, though expanding rapidly, had just fewer than 1,000 stores by Christmas 1997 and a market share of about 5 percent, according to the Portland Oregonian. Blockbuster was not invincible, however, and the company struggled in 1996 and 1997 as a result of financial and marketing blunders. Hollywood Video, meanwhile, enjoyed rapid expansion and healthy profits. Though media reports made much of the competition between Blockbuster and Hollywood, Wattles maintained that he did not view Blockbuster as a rival or an enemy. ‘‘[W]hile Blockbuster is certainly the Goliath, I would not describe us as the David at all. We are not out to slay Goliath,’’ Wattles said in the Wall Street Transcript in 1994. He referred to Blockbuster as ‘‘our friendly competitor’’ and insisted there was room in the market for both superstore chains. Still, the two appeared to be rivals—Hollywood claimed to have the largest number of titles, offered guaranteed availability of popular releases, and had aggressive pricing and rental strategies. Blockbuster, with a new CEO and renewed focus on video rentals, responded in late 1997 by lowering its prices, extending rental periods, providing incentives for returning rentals early, and offering more new releases. Blockbuster also launched a new advertising campaign in early 1998 with the theme, ‘‘Get your movie . . . and go home happy.’’
Blockbuster and Hollywood Video were the clear leaders in the video-rental market, but both companies had to contend with independent retailers as well as national and regional chains such as third-ranked Video Update Inc. and Suncoast Motion Picture Company. The independents, on the other hand, complained that they could not compete with video giants, which were capable of instituting revenue-sharing deals with movie studios that allowed them to purchase videos at much lower costs and thus offer larger numbers of popular titles—the Independent Video Retailers Group stated that independent stores located within three miles of a Blockbuster store suffered from an 11 percent decline in revenues during the first half of 1998.

TARGET MARKET OF THE "WELCOME TO HOLLYWOOD" CAMPAIGN

More than 80 percent of households in the United States owned VCRs in the late 1990s, and these households were filled with potential Hollywood Video customers. As a result Hollywood’s target audience was quite broad. The company’s advertising agency indicated that Hollywood’s target market consisted of those aged 18 to 45 as well as suburban families with children. Wattles discussed the company’s consumer target in an interview in the Wall Street Transcript in 1994 and said, ‘‘ . . . when the advertising agencies ask what your demographic profile is, I say, ‘Alive.’’’ Nearly everyone, Wattles elaborated, enjoyed watching movies. ‘‘One thing that’s nice about our business is our demographic profile. It’s so simple. Obviously there are demographic profiles of people who watch more movies than others but the curve is very slight. We’re not just a teenage business, or a midlife business, or an X-generation business.’’ To appeal to this wide audience, Hollywood Video stores focused on the one thing all the customers shared—the love of movies. ‘‘Our store design, our marketing, and our advertising reflect the name and image of Hollywood,’’ he explained. ‘‘We try to create an exciting environment that is movie and/or movie star oriented.’’ Though Hollywood Video’s audience was sizeable, many viewers were growing increasingly distracted by new entertainment technologies and options, such as pay-per-view television programming, digital video disks (DVD), the Internet, and expanded offerings from cable television and direct broadcast satellite. Industry analysts labeled the video-rental market mature, with little growth left. According to a study for the Video Software Rental Association, total revenue from the rental market declined 4.2 percent in 1997. Tom Wolzien, an analyst with Sanford C. Bernstein, pointed to a 1996 poll of 1,000 households with satellite television programming that discovered a 70 percent drop in video rentals. Still, many believed an audience for video rentals remained. Roffman Miller Associates’ Marvin Roffman told the Los Angeles Daily News: ‘‘There were a lot of people on Wall Street that were giving the death knell to the industry . . . [b]ut it’s probably not going to die for a long time. Home video is still a very viable business.’’ Hollywood Video believed this as well, and to continue to attract customers the company implemented many customeroriented policies, such as lower rental prices, guaranteed availability of popular rentals, and five-day rentals on every video in the store. According to the Portland Oregonian, Wattles was not intimidated by new technologies or forecasts of doom; Hollywood Video would, Wattles stated, change with the times and with clientele tastes. ‘‘As long as interest in movies continues, . . . there will be opportunities,’’ Wattles vowed.