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HBO Max's plan to take on Netflix, Apple and Disney

  • Published at 03:25 pm October 25th, 2019
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WarnerMedia executives want “Circe” to unleash a different power: attracting young viewers to the company’s belated entry in the streaming-video war

In the bestselling novel “Circe” - optioned by WarnerMedia for its forthcoming HBO Max streaming service - the daughter of the Greek god Helios tames wild beasts and menaces the gods.

WarnerMedia executives want “Circe” to unleash a different power: attracting young viewers to the company’s belated entry in the streaming-video war.

HBO Max, which will be HBO plus movies, original shows such as "Game of Thrones", and TV classics such “Friends,” will be available starting this spring to 10 million AT&T customers who are also HBO subscribers in the United States at no extra charge, according to AT&T Chief Operating Officer John Stankey, who disclosed the figures for the first time in an interview with Reuters.

These are a portion of the customers that currently pay for an AT&T-owned product such as DirecTV or AT&T wireless phone service.

By 2025, AT&T aims to reach about 80 million global subscribers, with about 50 million in the United States, a source briefed on the plans told Reuters. They are ambitious targets that would be consistent with Netflix Inc’s early progress, and in the mid-range of Disney+, Walt Disney Co’s Netflix rival, set to launch on November 12.

WarnerMedia hopes this service will get a boost in 2021 when it launches an advertising-supported option at a lower cost, insiders said.

After it launches the ad-supported option, the company will add live programming on HBO Max.

A long-term goal for HBO Max is to help AT&T retain wireless subscribers, according to executives, and also allow the company to pair wireless and DirecTV satellite data to learn more about consumers - and in turn, charge higher rates to advertisers.

As one of the final entries in the streaming wars, HBO Max faces a tough competitive landscape. Although the Warner Brothers archive includes thousands of films and TV series like “The Shining” and “Scooby-Doo,” it does not have the same brand awareness as Disney properties like Pixar or Marvel.

Price could also be an obstacle: HBO Max is likely to cost slightly more than the $14.99 the company charges for HBO - significantly more than competing services from Apple Inc ($4.99) and Disney ($6.99), and slightly higher than the standard $12.99 Netflix plan.

Selling HBO Max by piggybacking off the entrenched HBO service has its own challenges. Stankey wants to convert HBO’s 35 million US subscriber base, which includes the 10 million customers AT&T controls, to HBO Max. Doing so involves renegotiating deals with current pay TV providers, who may be wary of helping AT&T snatch their video customers.

And while AT&T executives believe that HBO Max could reduce churn on its cell phone business to boost profits, the link may not be that clear.

“AT&T hasn’t seen any more improvement (in churn) with wireless/video bundling than Verizon has seen without it,” said MoffettNathanson analyst Craig Moffett.

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