WarnerMedia CEO Jason Kilar expects the next release of the cheaper, ad-supported version of the HBO Max streaming service to unlock new values and increase subscriptions.
“It turns out that most people on this planet are not rich,” said Kilar during a virtual appearance at Morgan Stanley’s Technology, Media and Telecom conference. “If we can wake up and use the price and we are able to invent and do things elegantly through advertising to reduce the price of the service, I think that’s fantastic for the fans.”
Kilar did not provide any new details about the ad-supported layer, but said it was on its way to launch later this year. Price, release date and details about the ad experience remain a secret while the company solves all problems.
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For $ 15, the ad-free service launched in May 2020 is at the top of the market in terms of price. (Netflix, $ 14 for most subscribers in the United States, comes in second.) Legacy distribution agreements limit WarnerMedia’s options in terms of discount and package, in addition to AT&T’s presence. Injecting ads has not been a simple project in terms of technology or from the legal or political point of view of the sector. Other streaming services, like Hulu or CBS All Access, have added more expensive, ad-free layers to their ad-supported bases; no general entertainment service has yet attempted the opposite.
At the end of 2020, according to AT&T, the parent company of WarnerMedia, HBO Max had 17.2 million subscriber activations; combined with traditional HBO, it was 41.5 million. Comparisons with streaming rivals are inaccurate, as any customer paying for HBO has the right to activate their HBO Max privileges at no cost. But Kilar said the service was “two years ahead” of WarnerMedia’s initial predictions for 75 million to 90 million global subscribers – 50 million in the United States – by 2025.
Kilar, while maintaining an optimistic energy during the 45-minute session, seemed to tacitly recognize the challenges of AVOD given the HBO brand proposal. He said the company has sought to be “considerate” and “organic” in presenting sponsors’ messages to a service led by a premium entity whose initials mean “without ads” for almost half a century.
Warner Bros and the future of the film industry occupied a large part of the session. Kilar again was not specific about the prospects for the windows, although he agreed with the sentiments of Disney CEO Bob Chapek and others, who indicated that “it is hard to imagine going back to 2015” in terms of launch windows. The shock waves are still resonating with WarnerMedia’s decision to place all of its 2021 slate on HBO Max at the same time it hits theaters.
“We are still in trial mode,” he said when asked about the first results of the slate decision. In the second half of the year, he expects the industry as a whole to see signs of where consumer sentiment and industry strategy may be heading.
“Will theatrical attendance be wildly resurgent because people have been confined for a year?” he asked. “I could easily see this happening. And we will be there to serve you in this situation, and with pride. When you look at our development channel, we are certainly developing films for theaters. “
With Covid-19 vaccines still on the rise and half of theaters in North America still closed due to the pandemic, the CEO said: “I think it is too early to say whether things are changing permanently with regard to the economy. I tend not to think that is the case. I usually think that if you have a story worthy of an event, which we happily have … I would say that people will appear, fans will appear all over the world. “
The executive said he drew on his experience in the “seminal days of streaming” as founding CEO of Hulu, and before that on Amazon.
Asked how many streaming services a typical family will subscribe in the coming years, he laughed and said that designing is difficult. His expectation is “less than seven / less than six”, expressing confidence that HBO Max will be part of this inner circle.
Turner, home to cable networks CNN, TNT, TBS and others, will emphasize news and sports, said Kilar, with his main entertainment presence on HBO Max. great opportunity ”with CNN. (Reports indicate the company is exploring an independent CNN subscription service.) Although free and advertising CNN.com is “a great deal”, said Kilar, “I would say there is an opportunity to do even more” in streaming . “I’m excited about this opportunity, this potential,” he said.