The HBO brand has long been associated with premium subscription content and zero advertising, an idea that will be upended when HBO Max rolls out its ad-supported tier this year.
WarnerMedia is currently thinking about how to balance adding new revenue streams and scale with protecting the HBO legacy. CEO Jason Kilar, speaking today at Morgan Stanley investor conference, said if a streaming service takes a thoughtful, elegant and personalized approach to advertising, it can be helpful for consumers by providing relevant messages and lower prices.
“It turns out that most people on this planet are not wealthy, and so if we can…do things elegantly through advertising to reduce the price of a service, I think that’s a fantastic thing for fans,” he said.
During AT&T’s fourth-quarter earnings call in January, CEO John Stankey said the HBO Max ad-supported tier is still on target for a second-quarter launch but the company has yet to reveal what pricing will look like.
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HBO Max now counts 41 million domestic subscribers and nearly 61 million worldwide, up sequentially from 38 million and 57 million, respectively. AT&T also said that HBO Max activations doubled since end of the third quarter and reached 17.2 million by the end of the fourth quarter.
HBO Max was able to bring its app to Roku late last year after a months-long standoff, giving it a key point of distribution. Kilar today was asked about how to balance the need to partner with distribution platforms to gain scale for HBO Max with maintaining direct-to-consumer relationships that allow WarnerMedia to control access to content.
“We need to build a service that matters in a crowded landscape and I believe…that we’re absolutely on the path to doing that. If we can be one of those few services that truly matter, I believe we will be able to earn the right to have direct-to-consumer relationships,” Kilar said. He included Apple TV, Amazon and Roku ecosystems as distribution points where HBO Max can control customer relationships. “We’ve found ways to smartly partner with those companies in ways that work us and ways that work for them, and it’s called app-based distribution.”