WarnerMedia's HBO Max Launching in Crowded Streaming Space

HBO Max is targeting 50 million U.S. subscribers by 2025, and plans to roll out an ad-supported version next year.
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HBO Max, AT&T WarnerMedia's soon-to-launch streaming service, is aiming to capture demand for premium shows amidst a surge in demand for streaming. 

HBO Max goes live on May 27, with the $14.99 per month service offering access to the HBO library and a slew of other owned and licensed programming totaling 10,000 hours at launch. 

Shares of AT&T  (T) - Get Report closed 0.40% lower on Friday at $29.88.

HBO Max joins a number of popular incumbents in the subscription video on demand (SVOD) market, including Netflix  (NFLX.) , Disney+  (DIS) - Get Report, Hulu, Amazon  (AMZN) - Get Report Prime Video and others. And it's aiming for a mix of prestige programming from HBO, content from other AT&T owned brands, and select library content for both adults and kids. 

"Even in the midst of this unprecedented pandemic, the all-star teams behind every aspect of HBO Max will deliver a platform and a robust slate of content that is varied, of the highest quality, and second to none," said Robert Greenblatt, chair of Warner Media Entertainment, in a statement.  

At launch, HBO Max will include originals such as Love Life, a comedy starring Anna Kendrick; a ballroom dance competition series called Legendary; Craftopia, hosted by YouTube star LaurDIY; the Sundance 2020 Official Selection feature documentary On the Record, and new Looney Tunes cartoons from Warner Bros. It'll also be supplemented with licensed shows such as Friends, South Park and PBS's Sesame Street, as well as many feature films. 

Compared to six months ago, when HBO Max was originally announced, the streaming landscape looks much different. With consumers spending much more time at home, a variety of SVOD services and home entertainment options have seen an unprecedented spike in demand. 

In its recent earnings report, Netflix reported a whopping 16 million million new subscribers in the first quarter; Disney+ also recently surpassed 54 million subscribers globally, just about six months after launching. An April survey by the streaming platform Tubi found that U.S. streamers were viewing 8 hours of content on average while under stay-at-home orders. 

Moreover, consumers may be more inclined to spend money on subscription services with sports and other live entertainment options suspended: A survey by CompareCards found that 1 in 3 Americans shelled out for a new online subscription

That could bode well for HBO Max, which is among the more costly SVOD subscriptions at $14.99 monthly, compared to Netflix's $12.99 standard subscription and $6.99 for Disney+. 

AT&T is targeting 50 million HBO Max U.S. subscribers by 2025, and plans to leverage a range of cross-promotional opportunities in its mobile, pay TV and broadband offerings to get there. 

"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," said John Stankey, president and COO of AT&T, last year. "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."

Unlike some of its other competitors, HBO Max also plans to introduce a cheaper, ad-supported version in 2021, but has not yet confirmed pricing or a launch date for that tier.