WBD CFO Gunnar Wiedenfels sees advertising on HBO content as a major untapped revenue stream as the compay relaunched its HBO Max streaming service yesterday as Max.
“HBO is such an amazing and such a powerful brand and has never been exposed to advertising… The view of the market is coming around and I think advertising is accepted today as … a form of monetization for very, very premium content,” he told a JP Morgan media conference. “We have only just started,” he said, noting Mercedes’ sponsorship deal with Succession. “We started opening up some pre-rolls, but there are a lot more opportunities. It’s nothing we push right now, because of where the market is. But we are in the very early innings when it comes to advertising.”
He said the launch of the new Max streaming service combining HBO Max and Discovery+ content “went very well” and he was “actually very surprised by the large number of subscribers that already started watching on the new product.” WBD is pleased with the takeup for the new premium tier, introduced yesterday, he said, but didn’t provide any numbers.
There were plenty of users on social media yesterday reporting technical glitches trying to get the new app up and running. But Wiedenfels said, “The technical session metrics are already better on day one better than the prior product. And no accidents which is the most important point for an endeavor like that. So it’s day one. So far, so good. We’re very pleased with how that’s gone.”
“I have lot more confidence in our ability to profitably grow subscribers and drive down churn than I had 12 months ago,” hs said, noting that Discovery+ — still available as a standalone service — “has always had industry-leading churn rates out of the gate.” HBO Max churn was significant given “the nature of its tentpole, lighthouse, talk of the town” content that could bring in hundreds of thousands of subscribers when new episodes drop, who then cycled out. “It’s the nature of the content. That’s why we wanted to combine the two portfolios … We will be able to tell you in a few moths how that is working.”
HBO Max has been relaunched as Max with three tiers — ad light, ad free and ultimate ad free. HBO Max subscribers will automatically have their HBO Max apps updated to Max on mobile and streaming or would need to download the new Max app with setting and features transferring over. It combines HBO and HBO Max originals, Warner Bros. films, the DC universe, the Wizarding World of Harry Potter and kids’ content, along with Discovery programming across food, home, reality, lifestyle and doc from HGTV, Food Network, Discovery Channel, TLC and ID.