Avoiding the temptation to set a price that matches up with Disney+, WarnerMedia is taking the higher ground, so to speak, with HBO Max, a new subscription VoD streaming service that will start at $14.99 per month.
HBO Max, a service that will feature some 10,000 hours of library content and new originals spanning WarnerMedia's HBO, Turner and Warner Bros. properties, will debut in May 2020. WarnerMedia announced those details on Tuesday at an event held at the Warner Bros. studio lot in Burbank, Calif., but did not reveal a precise launch date.
HBO Max's starting price is the same for HBO Now, the standalone OTT version of HBO, but with lots more content. But it's also $8 more than the basic price for Disney+, a service that will debut on November 12 with a basic price of $6.99 per month, and $10 more than Apple TV+, which will launch on November 1 for just $4.99 per month. HBO Max will also be $2 more than Netflix's most popular Standard tier, which sells for $12.99 per month. HBO Max will also fetch more than Hulu's SVoD offering -- $5.99 per month with ads, $11.99 for the ad-free tier.
WarnerMedia plans to launch a less expensive, ad-supported version of HBO Max that will debut sometime in 2021 and take full advantage of Xandr, a unit focused on data-driven, targeted advertising.
While HBO Max's initial pricing could prove to be a hurdle, WarnerMedia parent AT&T believes that the service covers what it views as the three "pillars" of a successful streaming service -- content, a technology platform and marketing and distribution. "Only AT&T enters this space with solid footing in all three," boasted John Stankey, CEO of WarnerMedia.
Global sub goals
WarnerMedia, which will sell the new SVoD service directly to consumers as well as through distribution partners, has set a goal for HBO Max to rake in 75 million to 90 million subs worldwide, including 50 million in the US, by 2025. "It's a global game," Stankey said.
To jump start that goal, AT&T will offer HBO Max to the company's 10 million customers on the traditional HBO service. That "alone will create word of mount marketing, momentum and buzz right out of the gate," Stankey said. AT&T will also be aggressive in marketing HBO Max to the company's 170 million mobile, pay-TV and broadband customers.
He also acknowledged that HBO Max is entering play as traditional pay-TV bundles continue to fray (between its satellite, IPTV and OTT-TV services, AT&T lost a whopping 1.3 million subscribers in Q3 2019). The new SVoD service will later layer in some live and interactive programming and special events that will serve as "an important differentiator," Stankey said.
HBO Max is also being positioned to be AT&T's lead product to drive initial customer relationships in most US households, but will back that up by bundling in AT&T TV, an OTT-delivered multichannel pay-TV product that is currently being tested in a handful of US markets.
The initiative won't be cheap, as WarnerMedia and AT&T expect to spend $4 billion over the next three years building HBO Max, with annual incremental revenues from subscriptions, ads and other elements of the plan to reach $5 billion by 2025, according to CNBC.
By starting with a library of about 10,000 hours of content, HBO Max's content vault is smaller than some other SVoD services, but "removes the filler than no one watches, anyway," Robert Greenblatt, chairman of WarnerMedia Entertainment and Direct-to-Consumer, said.
WarnerMedia is also hopeful that its blend of content from HBO, Turner and Warner Bros. will strike a demographic balance (on its own, HBO's programming tends to skew to male audiences). HBO Max's curation and recommendation engine won't be solely tied to a robotic algorithm but will rely on human assistance.
Of note on the content end, HBO Max will feature more than 1,800 movies, including current box office hit Joker, and will become the exclusive streaming home for South Park, with all 23 seasons of the animated series to be offered on the platform (new episodes of South Park will be available the day after they premiere on Comedy Central). House of the Dragon, a prequel to the wildly popular Game of Thrones franchise, will also be offered on HBO Max as well as the regular HBO service.
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— Jeff Baumgartner, Senior Editor, Light Reading