WarnerMedia is looking to parent AT&T Inc. to help its new streaming service HBO Max secure a large audience at launch.
Offering about 10,000 hours of content, HBO Max is set to debut in May 2020 for $14.99 per month, the same price as the legacy premium service. AT&T expects HBO Max, which will include an ad-supported version of the service in 2021, to reach 50 million subscribers in the U.S. by 2025.
Of the 34 million linear and digital customers HBO is expected to have by the time the new service launches next May, 10 million will come from AT&T's distribution channels, including TV and mobile subscribers, and from subscription video-on-demand service HBO NOW. John Stankey, AT&T's COO and WarnerMedia's CEO, said at the company’s Oct. 29 investor day that the company will provide "a frictionless opportunity" for these HBO subscribers to sign up and get HBO Max immediately.
Tony Goncalves, the CEO of AT&T's Otter Media division charged with overseeing the launch, said AT&T customers without HBO who subscribe to premium video, mobile and broadband packages, will be offered bundles with HBO Max included at no extra charge. The HBO Max app also will be preloaded on both AT&T TV connected set-top boxes and Android phones.
Stankey said AT&T plans to aggressively market the service through the company's 170 million direct customer relationships across its wireless, broadband and TV customers, and in its 5,500 stores. The executive said HBO Max will be available in a "synthetic bundle" with AT&T TV, the telco's live TV internet streaming product slated to become the driver of its pay TV video bundle business in the years ahead.
HBO Max will also lean on the existing pay TV ecosystem to drive subscriber growth. Asked why pay TV operators would want to work with HBO Max, Stankey said it would enable affiliates to keep customers engaged on their platforms and they also could benefit from data and customer insights available through its Xandr ad unit that could be used to inform the distributors' own advertising strategies.
HBO Max can also be offered in "non-pay TV constructs" if distributors want to attach it to a broadband product and sell it as a stand-alone. Affiliates could also offer the product on a wholesale basis and participate in the recurring revenue stream.
The traditional HBO service is not fading away at this point. Existing HBO-branded services will continue to be offered through traditional cable TV distribution, and the company will maintain HBO NOW for a transition period.
"We're not going to leave them behind," said Goncalves.
AT&T CFO John Stephens said with the conversions and new subscribers, HBO Max will count 36 million U.S. customers by the end of 2020 and 41 million in 2022.
HBO Max is joining the growing streaming field at a higher monthly price point than other major players.
Streaming market leader Netflix Inc.'s standard package retails for $12.99 per month, while its most expensive tier, which allows for four concurrent users in HD and Ultra HD, is $15.99 a month. Netflix has bolstered its own customer count via a partnership with T-Mobile US Inc., which includes a subscription to the streaming leader through the telco's unlimited family plan.
The Walt Disney Co.'s Disney+ streaming service is set to launch Nov. 12 priced at $6.99 per month or $69.99 annually. A bundled Disney streaming offering comprised of Disney+, Hulu LLC's basic SVOD service and ESPN+ will cost $12.99 per month.
Disney also recently reached a pact with Verizon Communications Inc. under which Disney+ will be free for 12 months to Verizon's unlimited wireless customers, as well as new Fios residential broadband and 5G home internet subscribers. UBS analyst John Hodulik estimated the Verizon promotion encompasses some 17 million of the telco's subscribers, while MoffettNathanson analyst Michael Nathanson said it should cover 17.7 million customers.
Bowing Nov. 1, Apple TV+ is also expected to gain a host of trial subscribers. Apple Inc. is making the service, retailing for $4.99 per month, available for free for one year to all consumers purchasing devices such as an iPhone, iPad, Mac or Apple TV.
Peacock, NBCUniversal Media LLC's free ad-supported VOD offering, is slated to launch next April to its parent company's 55 million Comcast Corp. and Sky video subscribers. Additionally, Peacock will be positioned on Xfinity Flex, Comcast's streaming offering for internet-only customers.
Addressing the coming streaming wars, NBCU CEO Steve Burke on the company's recent earnings call said "a lot of people are being very, very aggressive about it" but added that he expects an "inevitable slowing down."
Sony Corp. on Oct. 29 said it would shutter its PlayStation Vue streaming TV service in January 2020 and refocus on its core gaming business, citing the "highly competitive" nature of the market as driving its decision to abandon the TV product.