WarnerMedia plans to charge $ 9.99 per month for ad-supported HBO Max



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Robert Aramayo portrayed a young Ned Stark in “Game of Thrones”.

Source: HBO

AT & T’s WarnerMedia plans to charge $ 9.99 per month for its ad-supported HBO Max service, which is slated to launch in June, according to people familiar with the matter.

The ad-free version of HBO Max, which debuted almost a year ago, costs $ 14.99 per month. This is the same price HBO charges pay TV subscribers who add the premium channel to their bundle.

AT&T said last week that HBO and HBO Max have a total of 44.2 million U.S. subscribers. AT&T completely restructured WarnerMedia to better compete with Netflix and other streaming services. A $ 9.99 ad-supported service will make HBO Max stand out as significantly cheaper than Netflix, which is priced at $ 13.99 per month. AT&T expects HBO Max and HBO to have between 120 million and 150 million subscribers by the end of 2025.

AT&T chief executive John Stankey told CNBC last week that the average HBO and HBO Max revenue per user of $ 11.72 in the United States was “really impressive.” He also noted that ad-supported HBO Max will expand the product’s potential audience to more cost-conscious consumers.

“Whether a customer chooses to purchase the ad-supported product or purchase the simple subscription product, it is equally profitable for our business,” Stankey said. Giving consumers the choice of which version of HBO Max they prefer “is a strength” and “by no means admitting something has not worked properly. That has always been the plan,” he said. he adds.

WarnerMedia plans to only attach advertisements to programs exclusively available on HBO Max and will not cloud HBO shows with advertisements, said WarnerMedia CEO Jason Kilar. Early last year, WarnerMedia initially considered selling an ad-supported product that contained only HBO Max content for $ 4.99 per month, but rejected the idea of ​​a combined product with HBO, two of the people said. , who asked not to be named because of the discussions. were private.

A spokesperson for WarnerMedia declined to comment.

Distributors are unhappy

Pay-TV distributors are not happy with AT & T’s decision to sell an ad-supported HBO product for $ 5 less than HBO, according to people familiar with the matter. Distributors share revenue with HBO for subscriptions sold between 30% and 60% depending on size, people said. An operator such as Comcast would take almost $ 9 monthly fee of $ 15 for a customer.

With an ad streaming service, pay-TV distributors will likely get a lower wholesale revenue share percentage, but get other perks like ad inventory, two people said. HBO hopes to generate an average revenue per user of nearly $ 14.99, if not more, for its ad-supported product. If possible, the ad inventory that converts to distributors can be valuable enough to make up the difference in revenue sharing loss, one of the people said.

Most distributors are willing to accept the product at its price of $ 9.99 and market it to non-HBO subscribers and broadband customers only, three people said. AT&T has reached distribution deals for HBO Max with Amazon and Roku, the leaders in streaming distribution, after months of difficult negotiations. One of the biggest hurdles in both deals was how to handle the ad-supported service, the people said.

After both deals are completed, WarnerMedia won’t need to go back to Roku and Amazon to secure distribution of the ad-supported product, the people said.

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