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A little more than a year after WarnerMedia announced its entry into the streaming age, the company gathered investors and press to unveil just how it will bring its legacy business directly to consumers.
During a Tuesday afternoon presentation at Stage 21 on Warner Bros. Studios’ historic Burbank lot, the company that owns the storied Hollywood studio as well as television networks HBO, TBS/TNT and CNN revealed that forthcoming streaming service HBO Max will bow in May and cost $15 per month, the same price as HBO but with significantly more TV shows and movies.
HBO Max will be filled with 10,000 hours of programming from across the media conglomerate’s divisions including such TV hits as Friends, The Big Bang Theory and South Park; Warner Bros. films including Joker; the full HBO catalog; and originals such as the previously announced Ansel Elgort drama Tokyo Vice, a Grease spinoff and a Gossip Girl sequel.
For WarnerMedia, the event was designed to make the case to investors why phone giant AT&T, which has $134 billion in debt, is investing heavily to modernize the WarnerMedia business just a year after spending $85.4 billion to buy the assets. Like Disney, which will launch Disney+ on Nov. 12, and NBCUniversal, which is prepping Peacock, WarnerMedia executives have been watching as pay TV subscribers decline and young people eschew the movie theater for Netflix. But it will cost as much as $4 billion over the next three years for WarnerMedia to build out the HBO Max content library, and that doesn’t include investments in technology infrastructure, marketing and subscriber acquisition.
“We’re all in,” WarnerMedia CEO John Stankey told the crowd as he kicked off the two-hour presentation.
HBO Max will be buoyed by the strength of its programming. The service will have 1,800 film titles including all DC movies and, eventually, the full 2020 feature film slate. On the TV front, premium cable network HBO will serve as the foundation for the service, offering up its library of current (Game of Thrones, Succession) and classic (Sex and the City, The Sopranos) shows as well as new releases like a forthcoming Game of Thrones prequel. Building on that slate will be Max Originals — such as the animated kids series Little Ellen from Ellen DeGeneres and the novel adaptation Circe — which will number 31 in the service’s first year and will help HBO Max reach audiences outside of HBO’s predominantly male demographic.
HBO Max’s lineup, while sizable, will be smaller than other streamers, a move that Bob Greenblatt, chairman of WarnerMedia’s entertainment and direct-to-consumer division, acknowledged as part of a strategy to focus on a more curated, personalized offering. “We actually think our value proposition improves when we narrow the options, removing much of the filler no one watches anyway,” he said. That will be reflected in a product that offers, for example, a collection of popular Friends episodes and viewing recommendations from the platform’s stars.
Even with a deep bench of new and classic programming, HBO Max’s price makes it one of the more expensive streamers on the market. On the low end is the $5-per-month Apple TV+, while on the high end is Netflix’s $16-per-month Premium tier.
AT&T will juice signups by offering HBO Max for free to its existing 10 million HBO customers. That will give it a base to grow to a forecast 75 million to 90 million customers in the U.S., Latin America and Europe, including 50 million domestic subscribers, by 2025. Executives said onstage that they are in discussions with other cable distributors to offer HBO Max to those HBO customers.
Not long after AT&T completed its purchase of WarnerMedia in June 2018, Stankey took the stage at Vanity Fair’s New Establishment Summit and announced plans to create a direct-to-consumer business that would combine the HBO, Turner and Warner Bros. brands. “My job isn’t to build another Netflix,” the exec said at the time. Over the ensuing year, the company’s strategy evolved. At one point, it planned to offer a multi-tiered service but later scrapped that plan in favor of a streamlined offering that would be sold at a single price. Over the summer, WarnerMedia debuted the HBO Max name and revealed that it would pay $85 million a year for five years to license the streaming rights to Friends, putting an end to the comedy’s long run on Netflix.
In announcing the plan for HBO Max on Tuesday, WarnerMedia also revealed that it will offer the service subscription platform in its first year before launching an ad-supported version in 2021. Also on the roadmap are plans for live and interactive programming as well as special events.
WarnerMedia is forecasting HBO Max domestic expenses to hit $4 billion by 2025, the year it expects the service to become profitable by making $5 billion in revenue.
To wrap up the presentation, AT&T CEO Randall Stephenson walked onstage to the Game of Thrones theme. “This is not Netflix, this is not Disney,” he proclaimed. “This is uniquely HBO Max.”
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