HBO Max could be priced as low as $8/month with ads, analyst says

HBO Max
More details about HBO Max are likely to come out next week during WarnerMedia Day on Oct. 29. (HBO)

HBO Max, AT&T’s 13th streaming video service, doesn’t launch until 2020, and pricing has not yet been announced. But one analyst believes the service could cost significantly less than HBO.

UBS analyst John Hodulik put out a research note ahead of AT&T’s WarnerMedia Day scheduled for Oct. 29. Among the subjects of the note is pricing, and UBS said that it previously believed that HBO Max would be priced at a slight premium to HBO. But now the firm believes that competitive pressure and the need for scale will drive prices down to around $12 per month or $8 with advertising. Of course, linear HBO subscribers would likely have a bone to pick with HBO Max subscribers paying less.

“Distribution agreements complicate the pricing decision however and it is unclear whether lower pricing for Max would trigger rate resets on existing linear subs,” Hodulik wrote.

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RELATED: AT&T may price HBO Max the same as HBO Now – report

Previous reports have suggested that AT&T intends to price HBO Max the same as HBO Now. According to NBC News, AT&T COO John Stankey wants a price for HBO Max that will retain existing HBO subscribers but also make the service more attractive to newcomers. Once subscribers are on board, AT&T will look into ways to raise prices gradually over time.

Barclays analyst Kannan Venkateshwar said that HBO Max can be positioned as a premium streaming service like Disney+, but that its current price point ($15/month) and legacy MVPD distribution agreements give AT&T less freedom in repositioning the brand. He said this may be why AT&T felt it needed to create a new brand, but HBO Max is a “lost opportunity to expand the funnel for HBO.”

“Apart from the issue of branding, HBO Now and HBO Max are likely to be the two most expensive streaming services, which automatically limits [total addressable market],” wrote Venkateshwar in a research note. “Instead, we believe the company should have created a lower-end HBO brand (say HBO Basic) with library content from Warner, HBO, DC Comics/CW and Turner in order to grow [total addressable market] and funnel/upgrade subscribers to HBO/HBO Now. This would also allow the company to have one brand for all originals (HBO Now), thereby making the service less dependent on singular successes such as ‘Game of Thrones.”

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