HBO spent decades as the premium service with a premium price but HBO Max is now less expensive than Netflix and WarnerMedia believes it could help fuel U.S. subscriber growth.
During today’s earnings call, AT&T CEO John Stankey said, after ending 2021 with 73.8 million global HBO/HBO Max subscribers, WarnerMedia expects domestic subscriber growth to be a little more suppressed than international going forward. However, he said HBO Max is currently in a good position with a “large domestic base and a very high ARPU” and forecast that the service could benefit from Netflix’s recent price hike in the U.S. and Canada.
“We said the market was going to come to us on pricing and lo and behold, we are no longer the high-priced offer in the market,” he said. “The nice part about that it that we think it will allow us to have domestic growth going forward.”
The HBO Max ad-free product is still priced at $15 per month but now the Netflix Standard plan, the company’s most popular option, is jumping to $15.50 per month.
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Despite HBO Max’s still relatively high price point, the service saw its domestic ARPU decline sequentially from $11.82 to $11.15, which likely has to do with the introduction of a $10 per month ad-supported tier last summer. The company expects the ad-supported HBO Max product to take over a higher percentage of the domestic subscriber mix this year due in part to the end of Warner Bros. same-day streaming releases, which were the primary difference between the ad-free and ad-supported products.
Stankey said with the streaming release window experiment over, he expects there will be some customers who choose to go the ad-supported route who may have gone the subscription route before. However, he said any losses in subscription revenues could be made up and then some by increased advertising dollars.
“We’re indifferent as to what the customer chooses. Frankly, maybe in some cases, it’s a bit more accretive if they go the ad-supported route,” he said.