UPDATED with pricing details: WarnerMedia confirmed a $14.99 retail price for HBO Max when it launches in the U.S. in May 2020, the two most anticipated details revealed during its investor day Tuesday on the Warner Bros. lot.
Exusting HBO subscribers and a range of 10 million AT&T customers will get the new service for free, which will give it an eight-figure start in the race to close the gap with Netflix.
The company has been projecting a spring launch for the past few months, ever since postponing an earlier fall launch in beta, so the May date did not land as a major surprise.
AT&T’s ability to offer an integrated approach also anchored the introductory presentation by the company’s COO, John Stankey. The executive, whose purview includes Warner Media, which he led for more than a year as its CEO, delivered a batch of projections and thematic plans at the start of the investor day.
Stankey said content, technology and distribution are the three key elements of streaming, and “only AT&T enters this space with solid footing in all three.” In terms of distribution, one leg up for HBO Max will be the plan to offer the service for free to about 10 million subscribers across platforms. That jump-start “will create momentum, word of mouth marketing and buzz right out of the gate,” Stankey said.
After the main subscription offering launches in May 2020, an ad-supported version will go live in 2021 and live offerings (mainly news and sports) will be incorporated that same year. Across Europe, the U.S. and Latin America, HBO Max will have 75 million to 90 million subscribers by 2025, Stankey said. Tailored versions of HBO Max in Europe and Latin America with localized programming will start to hit the market by 2021.
During an investor call with analysts on Monday to discuss AT&T’s third-quarter financial results, CEO Randall Stephenson affirmed the forecast for 50 million subscribers in the U.S. by 2025.
“HBO Max will have a positive and immediate impact,” Stankey proclaimed, saying AT&T will be able to “benefit from a virtuous cycle of investment and growth.”
The pricing strategy of HBO Max has been under the microscope for months, with the perception increasing lately that WarnerMedia faces a dilemma. Disney and Apple have staked out the lower end of the spectrum — Disney+ costs $7 a month with discounts for a full-year purchase and free access for a year to Verizon customers. Apple, similarly, went to $5 a month and is offering Apple TV+ free for a year to anyone buying a new Apple device.
Netflix, meanwhile, has been steadily raising its U.S. price in recent years, with most subscribers now paying $13 a month.
For HBO Max, given the traditionally strong relationship of HBO and the cable and satellite operators that brought it to life more than four decades ago, undercutting the $15 price of stand-alone service HBO Now would have been challenging.