|
 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, 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 <NFLX.O> early progress, and in
the mid-range of Disney+, Walt Disney Co's <DIS.N> Netflix
rival, set to launch on Nov. 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 <AAPL.O>
($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 U.S. 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.
PATH TO GROWTH
AT&T, saddled with $162 billion in debt, faces a litany of
challenges. Activist investor Elliott Management has expressed
skepticism about Stankey, considered the heir apparent to CEO
Randall Stephenson.
[to top of second column] |
"We know there's 75 million people in the range from two to young
adults that are available to us as potential new subscribers that
aren't part of the HBO universe already," said Greenblatt.
"The success of HBO Max is built on the ability for the company to
rationalize why (the companies that AT&T bought) all belong
together," said Stankey earlier this month.
WarnerMedia will announce HBO Max pricing and details on Oct. 29. In
interviews with Reuters, Stankey and Robert Greenblatt, chairman of
WarnerMedia Entertainment and Direct-to-Consumer, spelled out a plan
to aggressively expand HBO’s base.
The key to that growth is to continue providing content in the style
of HBO -- the company defines that as "quality"; industry watchers
invariably say "sexy" or "edgy" -- to its current over-40 viewers,
while expanding to a younger audience that is used to streaming
content and does not want to pay for cable.
That focus explains the investment in shows like "Circe"; a
"Gremlins" animated series; and a reboot of "Gossip Girl" that will
appeal to the under-40 crowd.
WarnerMedia is also investing in children's content and will feature
"Sesame Street" on HBO Max.
Even as it expands beyond traditional HBO programming, executives
want to position the new service as something different from Netflix,
which AT&T's Stephenson likened to Walmart at a 2018 investor
conference. They use a variety of euphemisms to make that
distinction: from "thoughtfully curated" to "Not a Walmart" to
"Premium." They bristle at "general interest."
Another opportunity to expand is by promoting HBO Max to DirecTV
customers who do not already subscribe to HBO. "We didn't buy
DirecTV because we love satellite," said Stankey. "We bought DirecTV
because we love the customer base and the customer base could be
migrated into more on-demand-oriented products and services."
Stankey also hinted at the possibility of bundling HBO Max with AT&T
wireless subscriptions. T-Mobile gives away Netflix to some
customers, and Verizon is providing a free year of Disney+ to some
customers.
On Tuesday Stankey, Greenblatt and others will reveal their plans to
investors, on the same stage where Warner Brothers shot actress Judy
Garland's comeback film "A Star is Born."
Their performance will help determine AT&T's future.
(Reporting by Helen Coster and Kenneth Li in New York; Editing by
Lisa Shumaker)
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