HBO Max is playing the finite game

Simon Sinek’s excellent book “The Infinite Game” breaks down two types of companies.

Those playing a finite game try to win right now at all costs. These are companies that make questionable moves in order to satisfy their investors. To quote King Louis XV of France in 1757, “After me comes the flood” — I’ll win today, and let the next guy clean up the mess.

Those playing an infinite game, which theoretically should be almost all of us, play for the long term. This may involve decisions that hurt today, but will benefit us tomorrow. A great example is when CVS stopped selling cigarettes — they wanted to be more secure in their promise to assist with the health of their customers, but had to take a short-term hit (lost cigarette sales) to get there.

HBO Max

The case of HBO Max, which is owned by Warner Bros, is a fascinating study into a company playing a finite game. While HBO Max and Warner Bros are essentially the same company, HBO Max has been paying royalties to Warner Bros for their content, and they’ve decided to cut a lot of programming to save money on the fees that they pay to themselves.

Here is how Techdirt describes this mess:

Variety explains that these shows were licensed to HBO Max by Warner Bros. (once more for those in the back: THAT COMPANY OWNS HBO MAX), but the streaming service reportedly decided not to renew those licenses (with ITS OWN COMPANY) to save money.

There are two results out of this:

• HBO Max and Warner Bros are both losers in this, as it will mean that HBO Max has less value and therefore fewer subscribers.
• As summarized by Techdirt: “All so a handful of executives and investors could enjoy some short-term tax breaks and compensation boosts at the cost of the company’s long term health and longevity. Super innovative stuff.“

The big problem is that last bullet — it works! The people causing this to happen are going to save money now and get some nice bonuses for their efforts. It’s similar to the Eddie Lampert stories about Sears — he essentially burned the company to the ground, but made billions doing it.

The infinite game will bring challenges, for sure, and it’s sad to see companies resort to such foolishness while playing the wrong kind of game.