UPDATED with pricing details: WarnerMedia confirmed a $14.99 retail price for HBO Max when it launches in the U.S. in May 2020, the two most anticipated details revealed during its investor day Tuesday on the Warner Bros. lot.
Existing HBO subscribers and a range of 10 million AT&T customers will get the new service for free, which will give it an eight-figure start in the race to close the gap with Netflix. Across Europe, the U.S. and Latin America, HBO Max will have 75 million to 90 million subscribers by 2025, executives said.
The company has been projecting a spring launch for the past few months, ever since postponing an earlier plan to release a beta version in fall 2019, so the May date did not land as a major surprise. The $15 price point also has largely been expected, though the amount and nature of the content on the service was emphasized throughout the two-and-a-half-hour event.
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During an analyst Q&A period, AT&T COO John Stankey confirmed that stand-alone app HBO Now (launched in 2015) and the authenticated HBO Go app for linear subscribers will continue to operate. But he sardonically called it an “IQ test” for customers comparing the plain HBO offering with the dramatically beefier HBO Max, when they both cost $15 a month.
AT&T’s ability to offer an integrated approach also anchored an introductory presentation by Stankey, which followed a lengthy sizzle reel highlighting the history of WarnerMedia properties, with a voiceover by Morgan Freeman. Stankey, whose purview includes Warner Media, which he led for more than a year as its CEO, delivered a batch of projections and thematic plans at the start of the afternoon.
Content, technology and distribution are the three key elements of streaming, and “only AT&T enters this space with solid footing in all three.” In terms of distribution, one leg up for HBO Max will be the plan to offer the service for free to about 10 million subscribers across platforms. That jump-start “will create momentum, word of mouth marketing and buzz right out of the gate,” Stankey said.
After the main subscription offering launches in May 2020, an ad-supported version will go live in 2021 and live offerings (mainly news and sports) will be incorporated that same year. Tailored versions of HBO Max in Europe and Latin America with localized programming will start to hit the market by 2021.
During an investor call with analysts on Monday to discuss AT&T’s third-quarter financial results, CEO Randall Stephenson affirmed the forecast for 50 million subscribers in the U.S. by 2025.
“HBO Max will have a positive and immediate impact,” Stankey proclaimed, saying AT&T will be able to “benefit from a virtuous cycle of investment and growth.”
The pricing strategy of HBO Max has been under the microscope for months, with the perception increasing lately that WarnerMedia faces a dilemma. Disney and Apple have staked out the lower end of the spectrum — Disney+ costs $7 a month with discounts for a full-year purchase and free access for a year to Verizon customers. Apple, similarly, went to $5 a month and is offering Apple TV+ free for a year to anyone buying a new Apple device.
Netflix, meanwhile, has been steadily raising its U.S. price in recent years, with most subscribers now paying $13 a month.
For HBO Max, given the traditionally strong relationship of HBO and the cable and satellite operators that brought it to life more than four decades ago, undercutting the $15 price of stand-alone service HBO Now would have been challenging.