LOS ANGELES — This fall, executives at HBO grew interested in purchasing a buzzy series from Reese Witherspoon and Jennifer Aniston about the wormy world of network morning programs, according to a person familiar with the network's strategy.
But any hope of landing the scripted project was shot down when the technology giant Apple swooped in with a sizzling offer. Not only did the maker of the Mac and iPhone toss more money at producers, it offered a two-season commitment without so much as a pilot — the kind of creative carte blanche HBO has been reluctant to provide.
By many measures, HBO appears to be a television juggernaut, powered by “Game of Thrones,” one of the biggest hits in the history of cable. But as the fantasy series began shooting its final six-episode season last month, the network faced a series of new hurdles. It has no obvious successor to “Thrones,” and it must contend with a highly competitive landscape in which Apple, Amazon and Netflix pour billions into content.
Industry experts say HBO’s problems, among other things, pose a challenge to the Justice Department’s effort to block AT&T’s acquisition of the network’s parent, Time Warner. Justice put HBO’s power at the center of its legal action last week, citing the network 18 times in its enforcement action, which said that an Internet and cable giant like AT&T could withhold HBO to disadvantage other providers. The department’s case could be substantially weakened if HBO turns out to be on shakier ground.
“HBO has been the holy grail — they invented the business of subscription television,” said James Goss, a senior analyst at Barrington Research in Chicago. “But the world is changing. A lot of channels are competing on the programming front.”
HBO, which declined to comment, in some ways remains in a privileged position. “Game of Thrones” continues to hit ratings highs. The show’s popularity — and the subscribers it has drawn — fueled a revenue jump of 12 percent in the third quarter, according to SEC filings with the Securities and Exchange Commission, and the network now tops 130 million global subscribers. And HBO remains a top destination for artists with provocative new ideas.
“I still think of them as a leader in cutting-edge content,” said Jordan Peele, the comedian and actor who directed the film “Get Out” and recently sold a new show he is producing, the race-themed horror tale “Lovecraft Country,” to HBO. “ ‘Lovecraft’ is a great example of their mandate in pushing boundaries.”
But industry experts say that when it comes to the key metric of shows in their prime — several seasons in, with an established fan base but still a large number of seasons ahead — HBO is lacking. It has several scripted series past the five-season mark with dim long-range prospects (“Curb Your Enthusiasm,” “Veep”) and a slew of unproven newer shows (“Westworld,” “The Deuce,” “Vice Principals”). Only “Silicon Valley” and “Ballers” are past their third season without being near their end — and “Ballers” has been at best a modest hit.
Just five years ago, HBO had a cluster of hits in the prime of their TV lives, including “Girls,” “True Blood” and “Boardwalk Empire.”
The crossroads is partly a function of executive change. HBO reset its development slate when Programming President Casey Bloys took over for Michael Lombardo 18 months ago. Bloys sent a number of projects to the scrap heap and greenlighted a pack of new ones.
Without a glut of viable franchises, HBO has tried to create value with one-offs, including a potential “Deadwood” movie, which a small but vocal fan base has called for; a documentary about the comedian Garry Shandling from Judd Apatow; and a cross-platform storytelling experience from Steven Soderbergh.
It has also relied on semi-stand-alone programming known as the anthology series — concepts into which new ideas and personalities can be inserted every season, which appeals to high-end film talent wary of a grueling series commitment.
These are, by definition, wild cards, as HBO learned when the second season of “True Detective” crashed. (It is trying to revive its fortunes with a third season.)
Executives also are attempting a new stand-alone show, this one based on Gillian Flynn’s bestseller “Sharp Objects,” bringing together showrunner Marti Noxon and the director Jean-Marc Vallee for an eight-episode event series.
Perhaps its best bet to establish consistency is with “Big Little Lies,” the dramatic mystery series directed by Vallee, written by David Kelley and starring Nicole Kidman. The show cleaned up at September’s Emmy Awards. The network is developing a second season, according to a person familiar with the project who was not authorized to talk about it publicly, with Kelley writing and Vallee moving into a producing role.
But the problem with one-off events is that they tend to attract subscribers in drips and drabs and don’t always retain them when the shows end. That makes HBO more vulnerable.
“They’re still the blue-chip company, but they’ve been knocked off their perch a little bit,” said a high-ranking Hollywood executive who is not affiliated with either HBO or its competitors and was not authorized to speak to the media and requested anonymity. “There’s so much competition that it just puts them in a tricky spot.”
That distinguishes this from a time of similar uncertainty at HBO, after “The Sopranos” wound down a decade ago. New entrants such as Apple, Netflix, Amazon and recently anointed Emmy drama winner Hulu are driving up prices for the top-tier projects for which HBO once paid reasonable dollars. Amazon, for instance, recently agreed to shell out an estimated $250 million simply to license TV rights to “The Lord of the Rings.” (Amazon’s chief executive, Jeffrey P. Bezos, owns The Washington Post.)
“The bubble keeps getting bigger, and HBO is trying to keep up,” said a high-profile producer who has a show set up at HBO and asked for anonymity to avoid jeopardizing relations with the network.
To many, the relationship between revenue and costs was summed up by HBO’s tale-of-two-cities 2016. The company’s subscription revenue reached $5 billion for the first time last year. But its programming costs were sky-high, at $2.18 billion — up 10 percent from two years before.
To keep the “Game of Thrones” mojo going, HBO is developing five prequels and spinoffs. Whether those shows see the light of production remains to be seen. Bloys has said he doesn’t intend for all of them to make it to air.
The desire for a new “Game of Thrones”-size hit in fact caused a headache for HBO last summer after it signed up the creators, David Benioff and D.B. Weiss, for a new counterfactual series called “Confederate.”
The premise — a post-Civil War country in which slavery is legal — caused a storm on social media and forced an HBO apology. Though the show is still in development, the creators are not actively working on it, a person familiar with the process said.
As it faces a court battle with the Justice Department, AT&T and Time Warner may be in the complicated position of having to argue that HBO isn’t quite the crown jewel it’s been touted as for years.
Legal scholars say the case is far from a slam dunk. AT&T and Time Warner are not direct competitors, and the hypercompetitive environment that faces HBO is one example of how the business of entertainment is fast-changing.
Making the case that Time Warner is super-powerful “is an uphill battle, but it’s not impossible,” said Eleanor M. Fox, a professor at New York University who specializes in antitrust matters.
The Justice Department declined to comment for this report.
HBO has already been shifting its business model, introducing a $15 a month service a few years ago for people to subscribe directly. But the service has been far less popular than rival Netflix’s.
“The question used to be, ‘Will customers pay for a subscription service?’ ” said Goss, the analyst. “We see that they will.” But, he added that “there are now a lot of services. And the question is, ‘Will they pay for all of them?’”