HBO Max with ads to debut in early June, cost $9.99/month

WarnerMedia has set a price of $9.99 per month for a new, ad-supported version of HBO Max that will debut in the first week of June. That price is $5 off the original ad-free version of HBO Max that launched last May.

The announcement confirms an earlier report on the pricing of the coming ad-backed version of HBO Max.

Figure 1: The ad-supported form of HBO Max will offer a set of options for advertisers, including the ability to deliver a message when users pause their streams.

But not all HBO Max services are created equal. The ad-supported version of HBO Max will provide access to the same original programming and, generally, the same catalog as the ad-free HBO Max. However, the ad-based, $9.99 form of HBO Max will not include the Warner Bros. films that are debuting in theaters and on the ad-free HBO Max concurrently throughout 2021.

HBO Max with ads will provide a set of advertising formats/options. After starting off with a "Brand Block" that allows advertisers to "own a block of content" on the streaming service, WarnerMedia will soon tack on a "Pause Ads" option that presents an advertising message when viewers pause their programming. Also in the queue is a "Branded Discovery" option that will allow advertisers to be integrated with the service as users search for HBO Max content.

While it's a gamble of sorts for WarnerMedia to attach advertising to a premium, HBO-branded service that has been commercial-free from the get-go, the hope is that the less expensive tier will help to draw in more consumers to the streaming service.

AT&T-owned WarnerMedia ended Q1 2021 with 44.2 million HBO Max and HBO subs in the US, and plans to launch HBO Max in 60 international markets by the end of 2021. AT&T expects to have 120 million to 150 million HBO Max subs (via a blend of ad-free and ad-supported subs) by the end of 2025.

All of those forecasts came ahead of this week's mega deal that will combine WarnerMedia and Discovery, which recently introduced its own streaming service, Discovery+, for $4.99 per month with ads and $6.99 per month without. In addition to getting AT&T out of the media business, the proposed combo aims to pump scale into a big move toward streaming and direct-to-consumer models amid the ongoing decline of traditional pay-TV.

Dual revenue models becoming commonplace for OTT

Although advertising and HBO have never been put together until now, it's become commonplace for new premium streaming services to offer both ad-based and ad-free models.

Peacock, the NBCU-owned streaming service with about 42 million signups so far, offers a pair of advertising-supported tiers (one free and a premium version that sells for $4.99 per month), and an ad-free tier that costs $9.99 per month. ViacomCBS's recently revamped Paramount+ OTT service debuted at $9.99 per month ad-free, with plans underway to introduce an ad-supported "base" tier of Paramount+ next month that will fetch $4.99 per month.

Meanwhile, Disney+ has remained ad-free during its early days, as has Netflix. Amazon Prime Video is currently ad-free, but Amazon has gotten a taste of the advertising game with IMDB TV, a free, ad-based streaming service.

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— Jeff Baumgartner, Senior Editor, Light Reading