Tuned In

What HBO Can Learn from Starbucks

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Maybe this coffee stuff does have something to do with TV after all.

I was talking to my colleague Barbara Kiviat—who actually does know something about Starbucks and business—and I asked her a question that I sort of roundabout implied in my coffee review last week. Isn’t part of the problem with Starbucks that maybe it couldn’t get any bigger while still remaining Starbucks? (As opposed to Dunkin Donuts or McDonalds, not that there’s anything wrong with either one.) When they grow beyond a certain point, don’t they necessarily have to lose what made them appealing to begin with? Does any company ever simply decide: you know what, we’re as big as we should be, and we’re deliberately not going to get any bigger?

What she said—and what it has to do with HBO’s troubles—after the jump.


Some companies, Barbara said, probably should decide to limit their growth. Growing too much, too fast, and ultimately diluting the brand as a result was a disaster for the Gap, for instance. The problem is, for one thing, that this is a hard message to sell to shareholders if you’re a publicly traded company. No more expansion for us, please! We’re full!

But it goes beyond that, she added. It’s also a cultural and psychological thing. What good American says no to expanding, progressing, achieving, hitting the next level? It’s why people accept promotions to jobs they’re not suited for. Because they’re promotions. Because if you say, no, I’m doing what I should be doing, and I’m just going to keep doing it well: we regard that as failure.

HBO, which just acquired a new programming chief, is in that same situation. It remains the dominant pay channel, with its subscribership estimated to remain somewhere in the ballpark of 30 million. And yet it has The Sopranos and Sex and the City eternally hanging over its head. When will it ever have another hit that big?, people want to know.

Answer: very likely never. In the late ’90s, The Sopranos and Sex and the City pretty much owned the field. Now—to the benefit of the rest of us—too many other people are making challenging shows for cable: Showtime, AMC, FX, Sci Fi. Maybe HBO is kicking itself for not having signed up Mad Men, and well it should. But while Mad Men on HBO might have been as great as The Sopranos, it would never have been as big. There’s just not the market opportunity anymore.

But what’s wrong with that? There may be things HBO needs to fix, like developing a few shows that are not about therapy, but it shouldn’t measure its success by its growth. Better to focus on trying to make the best shows on TV, hope for an audience of a few million for each, and work on monetizing its audiences’ passion (as it has) through On Demand, DVD and so on. And let that be enough.

CBS News could have learned the same lesson. It wouldn’t be judged a disaster right now if it hadn’t set the impossible target of believing it could fight destiny and make the network-news audience grow again—and thus hadn’t felt obligated to spend $15 million a year on a superstar anchor. Why not simply plan to do the best newscast possible with the audience it could reasonably expect to get (and adjust its hiring budget accordingly)?

Plenty of businesses would benefit from thinking this way. Hell, you and I would probably benefit from thinking this way. But I suspect Barbara is right: most of us won’t. Must bigger always be better?