WarnerMedia wants to lure more streamers into the HBO Max tent with a cheaper version of the service — priced at $9.99 per month — that includes ads.
The ad-supported HBO Max, set to debut in the U.S. the first week of June, will be 33% less than the premium no-ads package at $14.99. The details were revealed at WarnerMedia’s upfront Wednesday.
HBO Max With Ads will be “the most brand-safe, elegant experience for advertisers” in the industry, WarnerMedia CEO Jason Kilar vowed in a prerecorded segment during the presentation.
WarnerMedia ad sales head JP Colaco said the ad-supported HBO Max service will have the “lightest ad load in the industry,” but he didn’t specify what that will actually mean. (NBCUniversal has touted that Peacock with ads carries no more than five minutes of ads per hour.) Colaco said HBO Max With Ads is launching with most major agency holding companies and an array of brands across all verticals and categories.
WarnerMedia has talked up plans for the price-reduced, ad-supported version of HBO Max for several months. The lower-cost tier will not include the day-and-date Warner Bros. movie premieres throughout 2021 — but otherwise will be the same as the full-freight product. Also, the version of HBO Max with ads will not run commercials against HBO’s original programming.
Kilar, whose future as WarnerMedia’s chief exec is up in the air following AT&T’s deal to spin off the media conglomerate in a combo with Discovery, has said WarnerMedia will make the same amount of margin on HBO Max whether someone chooses the full ad-free HBO Max or the cheaper tier.
“I’m not at all worried” about cannibalization of the higher-priced service by HBO Max with ads, he said at an investor conference last week. It wouldn’t even matter, he said, if 100% of HBO Max’s existing subscribers opted to take the ad-supported tier.
HBO Max with ads mimics the dual revenue stream model of basic cable programmers, which get a cut of subscription fees and also sell ads. Note that the ad-supported HBO Max is pricier than Disney Plus ($7.99/month) with no ads, and more than Hulu with ads ($5.99), Paramount Plus with ads ($5.99) and Peacock Premium with ads ($4.99).
HBO Max currently offers more than 13,000 hours of programming, including more than 100 originals like “The Flight Attendant” and a reboot of “Gossip Girl,” as well as licensed series including “Friends,” “The Big Bang Theory,” “Sesame Street” and “The Fresh Prince of Bel-Air” plus movies from Warner Bros. and DC.
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