TOO MUCH TV? ENTER HBO MAX, THE LATEST STREAMING WANNABE
Is a pandemic the perfect time to launch a new and relatively expensive streaming service? AT&T sure hopes so.
The phone company is investing billions in HBO Max, its first big entertainment venture since it spent $85 billion for Time Warner in 2018. The good news for its timing: Millions are stuck at home, watching more video than ever. The bad news: Many of them are also out of work and carefully watching their expenses. The service was launched last Wednesday in the US.
“People are going to look at the price point first,” said Steve Nason, a research director at Parks Associates. HBO Max costs $15, same as the HBO Now streaming service it’s supposed to replace, with discounts after the launch limited to some AT&T customers, as well as a one-week free trial. Other new streaming services such as Disney Plus and Quibi launched with cheaper prices and bigger discounts.
Entertainment companies like AT&T’S Warnermedia are broadly shifting to streaming video, following in Netflix’ wake, as more people drop their traditional cable bundles. Disney launched Disney Plus and the sports-focused ESPN Plus and took control of Hulu from an industry joint venture. Comcast’s Nbcuniversal is launching Peacock widely this summer. Viacomcbs is redoing CBS All Access, pumping it up with more programming.
Even Fox Corp. has its Fox Nation app. Apple, a tech company, started a small service of its own. A short-video service targeted to cell phones, Quibi, also hopes to get in on the streaming pie; it hasn’t had much success yet.
HBO Max comes stacked with goodies, like browsing a particularly pleasing Blockbuster store—including classic quality-tv series from HBO like “The Sopranos,” “The Wire” and “Sex and the City;” comfort-food network TV in “Friends” and “The Big Bang Theory;” Superman and Batman movies from DC. The Warner Bros. film library stretches back decades to Hollywood’s golden age. There’s even a reboot of Looney Tunes.
But people will have to decide if it’s worth paying up for a new video service on top of the “foundational” services many already have: Netflix, the heaps of videos that come with an Amazon Prime membership, Hulu and, Disney Plus.
The company has predicted 50 million US subscribers by 2025, building on a base of 36 million current HBO customers, per research firm S&P Global. That number includes people who pay their cable company for the channel and the HBO Go app, as well as those who subscribe to the HBO Now stand-alone streaming service.
Warnermedia would like to convert those users to HBO Max, but there are contract issues that muck it up and could potentially antagonize customers.
Another weak point for Warnermedia is that the coronavirus pandemic has shut down Hollywood productions, and that’s expected to slow down the rollout of HBO Max’s original productions, such as a highly anticipated “Friends” reunion special that was supposed to be ready for launch.
But that impact will be felt more in 2021 than this year, Forssell said. Originals are important because they help bring in subscribers and get them to keep paying, month after month.
For AT&T, getting HBO Max right is critical. Its Directv satellite service is bleeding customers, and the traditional TV model is under threat from industry-wide cord-cutting and, recently, a coronavirus-related advertiser retreat.
Max also has the potential to entice wireless customers, as AT&T offers it as part of a bundle. But the competition for customers’ attention and dollars is fierce.
“They’re going shoulder to shoulder with media titans,” Fritzsche said. “They haven’t played in that sandbox before.”