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AT&T executives gave investors a look at HBO Max, WarnerMedia's just-announced SVOD service, and also laid out its playbook for attracting at least 15 million new subscribers, despite stiff competition and the service's premium pricing.

When it goes live in May 2020, HBO Max will compete with others who have been in the market for years, as well as newer entrants with extremely deep pockets. Netflix (NFLX) - Get Netflix, Inc. Report and Amazon (AMZN) - Get, Inc. Report have already each accumulated tens of millions of subscribers, while Apple's (AAPL) - Get Apple Inc. Report and Disney's (DIS) - Get Walt Disney Company Report streaming services both will go live in the next two weeks. Shares of AT&T were up 0.89% on Wednesday. 

At $14.99 per month, HBO Max includes a mix of HBO programming, originals, and content from its wholly-owned channels and other holdings (Warner Bros., TNT, TruTV, Adult Swim, CNN, Crunchyroll and others) as well as licensed shows such as Sesame Street, South Park and Friends

AT&T executives forecast that HBO Max will accumulate 50 million U.S. subscribers by 2025, and between 75 million and 90 million internationally. And part of the plan to lure subscribers involves converting current HBO subscribers to the new HBO Max offering next year. Domestically, HBO has about 35 million subscribers, including 10 million who subscribe to HBO Now, either directly or though an AT&T-owned video service, such as DirecTV or AT&T TV Now. 

HBO Now subscribers will have a no-brainer proposition come May 2020 -- HBO Max costs the same as an HBO subscription while offering far more content. HBO Max will have 10,000 hours of content at launch, executives said on Monday. And according to John Stankey, CEO of WarnerMedia, the company can leverage its relationships with AT&T customers to put HBO Max on millions of screens.

"It's worth pointing out upfront that our customers interact with us more than 3.2 billion times annually and we have 170 million direct customer relationships across mobile, pay-TV and broadband," Stankey said on Tuesday. "Our retail relationships and distribution provide us an advantage unavailable to most of our streaming competitors, and we're developing specific distribution plans, working with our current affiliate partners. This is how we intend to reach 50 million subscribers domestically by 2025."

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HBO Max's price places it on the high end of SVOD pricing. Netflix's most popular tier costs $12.99 per month in the U.S., while Disney's and Apple's offerings will cost $6.99 and $4.99, respectively. Disney is also bundling Disney+ with ESPN+ and ad-supported Hulu for just $12.99 per month. 

"HBO Max's premium price point relative to Netflix and Disney could lead to a slower initial uptake until the company's ad-supported version debuts in 2021," said Chris Versace, CIO and thematic strategist at Tematica Research and a RealMoney contributor.

HBO Max plans to introduce an ad-supported tier in 2021, but didn't disclose pricing for that tier. It will also offer AT&T customers bundles that include HBO Max at no extra charge, and they will find the HBO Max app pre-loaded on AT&T-connected set top boxes and Android phones it sells, the company said. 

Shares of AT&T are up 29% so far this year. 

The Trifecta Portfolio managed by Chris Versace and Bob Lang are long AT&T and Disney shares.

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