WarnerMedia’s long-awaited, ad-supported tier of HBO Max is officially launching today, promising the “lowest commercial ad load in the streaming industry.”
The company said the $10-a-month tier (a notable discount from the ad-free version’s sector-high $15 price) will be “rolling out throughout the day.” At its upfront presentation to media buyers last month, WarnerMedia said HBO Max with Ads would go live in early June, but it did not specify a date.
With a maximum of four minutes per hour of ads — and none during HBO programming — the cheaper tier has been viewed internally as a key stimulus for subscriptions. NBCUniversal’s Peacock and Discovery+ are also in the same neighborhood. Discovery said it ended up at 4 minutes per hour of ads after initially planning for five.
One carve-out for subscribers to the cheaper tier is access to the day-and-date releases of Warner Bros films like the upcoming Space Jam and Matrix sequels. Those films can be seen on opening day only by ad-free subscribers, though the ad-supported tier will get them in later release windows.
HBO Max and regular HBO together had 44.2 million subscribers as of March 31, with most for the time being still in linear. WarnerMedia earlier this year upped its projections to 120 million to 150 million global subscribers by 2025, saying the year-old service was ahead of initial forecasts. Its expansion to dozens of territories outside the U.S. also begins this month. The early months of HBO Max were bumpy, partly due to the coronavirus pandemic but also because of a swirl of legacy branding and distribution issues and management and organizational upheaval.
AT&T announced last month it will spin off WarnerMedia into a combined entity with Discovery, in a deal expected to close in mid-2022.
The introduction of an ad-supported tier after an ad-free one was already in the market is a reversal of the route taken by services like Hulu and CBS All Access. The move is somewhat analogous to those of networks during the early days of cable TV, among them AMC, Bravo and MTV, which started out ad-free before adding sponsor time as they grew. The dual revenue stream of subscriptions and advertising has been a hallmark of the pay-TV business, and media companies see a chance to replicate it in streaming, without sharing as much with distributors in a direct-to-consumer model.
Netflix, Amazon Prime Video and Disney+ enjoy a sizable lead the streaming market with no advertising, but a host of ad-supported streaming services have blossomed in recent years, especially as smart-TV penetration and connected-TV use have surged.
“Advertising is a time-tested way to reduce the cost of great entertainment and reach a wider audience,” HBO Max EVP & GM Andy Forssell said. “We’ve worked hard to create an elegant, tasteful ad experience that is respectful of great storytelling for those users who choose it, and which we’re confident will deliver for our advertising partners as well.”
Ads on HBO Max, the company said, are “designed to complement and enhance the overall viewing experience and will be thoughtfully surfaced across HBO Max’s content catalog in a way that maintains the integrity of the programming.”
More than 35 brands across all major categories are slated to go live on HBO Max this month.
WarnerMedia ad sales chief JP Colcaco said the new tier of HBO Max is an “innovative, best in class streaming ad experience” driven by personalization. “Together with our valued partners we will continue to explore the art of what’s possible in video advertising across all platforms,” he added.
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