HBO Max’s long-awaited, ad-supported tier will roll out in the first week of June, at $9.99 a month — $5 less than the ad-free version launched a year ago.
The announcement came at the end of WarnerMedia’s virtual upfront presentation to advertisers. WarnerMedia CEO Jason Kilar said the AVOD option would “supercharge” the service. The price point for the less-expensive tier had been widely expected, and the company already had said June would be the launch month, without specifying a date. The ad-supported launch comes as the service begins to roll out globally, reaching dozens of territories in Latin America and elsewhere by year-end.
During the upfront, ad sales chief Jean-Paul “JP” Colaco said the service would have “the lightest ad load in the streaming industry, coupled with the most premium content.” The company has gotten commitments from “most major agencies and brands, across a diverse array of categories,” he added.
At an investor day hosted by WarnerMedia parent AT&T in March, Kilar said the company had booked $80 million in ad revenue for the HBO Max AVOD tier. The company has not provided any updated figures as of yet.
At $15 a month for the ad-free version, HBO Max at the high end of the streaming market and is seen as a limiting factor. Paying subscribers to traditional HBO can get Max at no extra cost, and AT&T bundled it and discounted it in its wireless and pay-TV packages. As of the end of the first quarter, HBO Max and HBO had 44.2 million subscribers, which is ahead of internal projections for 2025 levels. Even though the numbers are less than half the reach of Disney+, WarnerMedia and AT&T have pointed to robust revenue per user figures, saying they make more money from a smaller base.
HBO Max launched in May 2020 and plans have been in the works for an ad-supported tier for years. The last in-person upfront presentation by WarnerMedia, in 2019, featured an appearance by AT&T CEO John Stankey, then in a different role overseeing the media assets. Even though HBO Max didn’t have an ad offering at the time, it was teased for media buyers in something of a high-wire act given sensitivities in the ad community about subscription streaming. Conan O’Brien, taking the stage in support of his then-active TBS late-night show, even came up with a name for the streaming service, which at the time was still nameless: “Stankeyvision.”
The order in which the company is phasing in AVOD is the reverse of other streaming outlets like Hulu or CBS All Access (now Paramount+). Those services started with ad-supported offerings and then introduced ad-free options.
No HBO programming will carry with ads in the new offering. Also off limits to subscribers to the lower tier are the Warner Bros movies that have been going live on the platform at the same time they reach theaters.
Kilar, whose status has fallen under question this week in light of the pending merger of the company with Discovery, has recently championed the AVOD version of HBO Max. In an appearance last week at a conference hosted by Wall Street research firm MoffettNathanson, he said the team putting together the new tier has been “sweating” the details.
“I think your conclusion when you see it is going to be, ‘Wow, this is elegant,'” he said. “This is unlike any other service in terms of how they have executed this, how thoughtful they have been in terms of ad load and staying away from creative fatigue and just the chrome, the user interface, the pixels,'” he said. “We lived up to the brand promise of HBO.”
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