Inside HBO Max’s gamble on new streaming service
Pairing Tony Soprano with Elmo and Chandler Bing was always going to be tricky.
Would the murderous mob boss befriend a red Muppet? Forget about it. Nor would Tony Soprano have much patience for the wiseguy antics of Chandler Bing, the neighbor from “Friends.”
Yet here they are, pillars of a new streaming service, HBO Max, that rolls out Wednesday. Ever since telecommunications giant AT&T bought Time Warner nearly two years ago and renamed the company WarnerMedia, executives have been building toward this event. HBO Max’s launch will be a watershed moment as a major Hollywood player for nearly a century attempts a high-wire pivot into a new media powerhouse.
But in figuring out how to market HBO Max, WarnerMedia executives confronted inherent conflicts. There are already three other HBO-branded products: HBO, the premium television channel; HBO Go, an app for subscribers to watch shows on the go; and HBO Now, a stand-alone service dedicated to the network’s signature programming. How do you make the fourth, and possibly the grandest, iteration stand out, particularly in a pandemic?
To lure new customers, the company has long envisioned combining its signature HBO programs, such as “Game of Thrones,” “The Sopranos” and “Succession,” with more commercially oriented original shows and the deep Warner Bros. library of TV hits, cartoons and movies.
But the supermarket approach to HBO, which for years has operated as an island of excellence and sophistication, creates the risk of a disconnect for viewers: Queen Daenerys and her dragons from “Game of Thrones” coexisting with Dorothy and Scarecrow from “The Wizard of Oz,” and Scooby-Doo, Tweety Bird and Elmer Fudd.
“The HBO brand has always been the premium brand in television,” said Deana Myers, a research director at S&P Global Market Intelligence. “But now they are doing originals for
HBO Max, including reality shows, that look nothing like an HBO show. I think they are going to confuse the brand.”
Another challenge: The production shutdown caused by the coronavirus outbreak disrupted WarnerMedia’s plans to have a robust slate of original programs to promote. Streaming services have found that originals are a key tool in recruiting new subscribers. When it goes live, HBO Max will offer just six fresh shows.
In addition, HBO Max will be offered at $14.99 a month, making it the priciest streaming service. Netflix’s most popular plan is $13 a month. HBO Max’s higher rate may discourage some consumers, given skyrocketing unemployment.
WarnerMedia has offered a teaser rate — $11.99 a month for a year — for customers who sign up before the May 27 launch.
Executives believe that, with 10,000 hours of studioproduced content, subscribers will find that HBO Max is worth the price, and that scores of binge-viewers will be hungry for a fresh trove of quality programming. AT&T predicts that HBO Max will have 50 million customers in the U.S. by 2025, and it promised to spend $4 billion on the service over the next three years.
“We’re going to put all of our muscle behind HBO Max,” Bob Greenblatt, chairman of WarnerMedia Entertainment and Direct-to-Consumer, said in an interview. “We think we have a really good and valuable product to offer.”
HBO has long been a leader, dating to its 1972 birth. It was the first U.S. network to use satellites to deliver its programming. It wrote the rules on premium TV, then ambitiously carved out its niche in prestige television in the late 1990s and early 2000s with such culturesetting programs as “The Sopranos,” “Sex and the City” and “The Wire.”
But the rapid acceleration of cord-cutting and the rise of streaming have forced legacy networks like HBO to adapt to the new digital TV world.