HBO Max Aims to Offer Cheaper, Ad-Supported Subscription Option in Q2

WarnerMedia announced the timetable for HBO Max's cheaper subscription tier during the company's Q4 2020 earnings call on Wednesday.
"Wonder Woman 1984"
Warner Bros.

HBO Max will likely add a cheaper, ad-supported subscription tier during the second quarter of 2021, AT&T CEO John Stankey said on Wednesday.

Stankey announced the news on a call with investors during the company’s Q4 2020 earnings report on Wednesday morning. Details such as pricing, the subscription plan’s amount of ads, and a specific release date were not provided. An ad-supported subscription option for HBO Max has long been anticipated; the AT&T-owned WarnerMedia said in 2019 that such a plan would be implemented following HBO Max’s launch but did not offer a timetable for the ad-supported tier.

HBO Max, which requires a $14.99 per month subscription and is expected to launch internationally later in the year, is the most expensive of the major streaming services. The streaming service suffered from slow consumer adoption following its launch in May 2020, several weeks before the nationwide rollout of NBCUniversal’s Peacock streaming service, which boasts several subscription options, including a free, ad-supported tier. WarnerMedia enacted two waves of layoffs in the months following HBO Max’s launch.

Although HBO Max’s slow start was at least partially due to its initial unavailability on popular connected TV products such as Roku and Amazon Fire TV, the streaming service is now accessible on both devices.

AT&T stated that there were a combined 41.5 million subscribers between its HBO Max service and domestic HBO subscribers at the end of December but did not offer specific subscriber data for each service. The company claimed that there were 17.2 million activated HBO Max subscriptions in Q4, partly due to the temporary release of “Wonder Woman 1984” on the platform, but it is unclear how many of those subscriptions are still active. The company is continuing to see losses in its pay-TV business: AT&T lost 617,000 subscribers between DirecTV, U-Verse, and AT&T TV in Q4, according to the company.

Stankey also addressed WarnerMedia’s decision to release its 2021 theatrical slate on HBO Max, which generated controversy in the entertainment industry, including condemnation from filmmakers such as Christopher Nolan and Denis Villeneuve.

“Part of that call was built on the dynamic of what we thought the theatrical moviegoing audiences were going to look like in 2021,” Stankey said on the investor call. “You’ve seen other studios have continued to snowplow releases in the second half of the year, which cements our view. We’ll see a crowded theatrical field in late 2021 and early 2022. We don’t believe that magically just because there’s more content showing up in theaters all at the same, that’s going to dramatically increase the size of the moviegoing population at that time.”

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