The details of AT&T’s forthcoming WarnerMedia SVOD service are firming up around an offering that will include access to HBO, Cinemax, the Warner Bros. film and TV catalog and exclusive originals for $16-$17 per month, according to a news report in the Wall Street Journal. The service is expected to launch in beta before the end of 2019.
The single-service, single-price plan currently favored by AT&T and WarnerMedia execs represents a significant shift from the three-tiered plan that WarnerMedia CEO John Stankey outlined in November. That plan would have included a lower-cost tier with movies, a mid-priced tier with blockbuster movies and HBO originals, and a higher-priced tier combining the first two tiers with additional catalog and licensed content.
Media analysts had been critical of the three-tiered approach as overly complicated. MoffettNathanson analyst Michael Nathanson in December called it a “major strategic error” and wrote in a research note earlier this week, after a discussion with Stankey, that the single-tier approach that AT&T was considering would be an “obvious improvement” over the previously announced plan. Also, Fast Company senior writer Nicole LaPorte likened the tiered approach to AT&T’s data plans “that only a wireless executive could love.”
There are few details yet on what content beyond HBO and Cinemax would be on the new service, but WarnerMedia controls a vast film and TV catalog that includes the Harry Potter and DC Comics franchises, recent hits like "Crazy Rich Asians" and "A Star Is Born," classic films like "Gone with the Wind" and "Casablanca," hit sitcoms like "Friends" and "The Big Bang Theory," and TV dramas like "Riverdale" and "Claws." The first original announced for the service is Paul Feig and Anna Kendrick’s rom-com anthology series "Love Life."
The WarnerMedia service will join an increasingly crowded SVOD market that includes freestanding streamers like Netflix and Hulu, premium channels like Showtime, Epix and AT&T’s own HBO, vSVODs like YouTube TV and AT&T’s own DirecTV Now, niche services like Acorn TV and CuriosityStream, AVODs like PlutoTV and Tubi, and announced services like Disney+ and Apple TV+ launching this fall and NBCUniversal’s service launching in early 2020.
WarnerMedia is in a tight spot on pricing with its own HBO Now service already priced at $15 a month and cheaper competing streamers like Netflix ($13), Hulu ($11), Amazon’s Prime Video ($9) and soon Disney+ ($7). AT&T will also face pressure from its cable partners, which account for the bulk of HBO’s 140 million global subscribers, to maintain HBO’s current pricing.
The Wall Street Journal reported sources saying that WarnerMedia is considering a lower-cost, ad-supported version of the service for launch later in 2020. An ad-supported service would line up well with cheaper, ad-supported versions of services like Hulu and CBS All Access that both companies have said are as popular as the ad-free versions and that can be delivered seamlessly on the same app as the ad-free versions.