At almost $15 a month, HBO Max is more expensive than its streaming competitors. But Warner Media LLC CEO Jason Kilar has a solution.
The AT&T Inc. unit plans to release a lower-priced, ad-supported version of HBO Max in the second quarter. Kilar said the advertising will resonate with marketers and consumers alike because it will be highly targeted, disseminating personalized pertinent spots.
By thoughtfully directing appropriate commercials to viewers, Kilar contends, "You can actually do something that's very helpful for them in terms of the advertising message that you serve."
That functionality will result in a reduced consumer price, which will in turn boost subscriber numbers. "It turns out that most people on this planet are not wealthy," the CEO said, speaking March 4 at Morgan Stanley's virtual conference.
Kilar said once people see the service's design features, they are going to be "excited" about "the insertion of advertising and how it's a very organic nature of the experience."
Kilar also noted that the service will present marketers with opportunities "to surgically target and address fans with their message."
Addressability will not only be integral for the commercial version of HBO Max, but is becoming increasingly important within Warner Media’s Turner portfolio of cable networks.
Asked if Turner networks need to migrate from traditional infrastructure to a streaming backbone to capitalize on superior targeting, Kilar said there are many addressability gains that can be had through the extant architecture. "We're leaving no stone unturned to make sure that we unlock the addressability of that business, so consumers don't have to do anything different."
He added that the company is "going to see uptake in people choosing the ad-supported option of HBO Max. That is going to create lots of inventory for our advertising team to be able to sell to marketers."
With 17.2 million HBO Max activations, combined with customers of the traditional HBO premium service, Warner Media counted 41.5 million of these subscribers at the close of 2020.
In addition to the upcoming launch of the ad-supported offering, HBO Max will launch in 39 Latin American and Caribbean countries in late June. Given the international rollouts and the quality of the offering — combining HBO with Turner fare, Warner Bros. film and TV library content, and originals — Kilar expressed confidence HBO Max will be among the handful of streaming services to amass hundreds of millions of worldwide customers.
"I feel very good about our ability to be in that small group that ultimately gets to scale across the globe," he said.
On the film front, Kilar said consumers have embraced the company's decision to simultaneously release its 2021 theatrical slate in available theaters and on HBO Max amid continuing COVID-19 constraints.
"They're responding absolutely with regards to HBO Max. And as you saw this past weekend, we had the No. 1 movie at box office in 'Tom & Jerry,'" he said. "It's very early. We're three movies into it, but I couldn't be happier in terms of at this point of the year."
During the second half of 2021, Kilar expects consumer sentiment to inform industry release and windowing strategies.
"Is theatrical attendance going to have a crazy resurgence because people have been cooped-up for a year?" he said. "I could easily see that happening. We will be there to serve them in that situation, and proudly so. When you look at our development pipeline, we absolutely are developing movies for theatrical exhibition."
Kilar agreed with The Walt Disney Co. Disney CEO Bob Chapek, who noted at this conference on March 1 that he was not sure "there's going back" to the pre-COVID-19 times in terms of historic release windows, given that consumers have had increasing access to theatrical content in their homes due to the impact on movie houses.
"It doesn't seem like that to me," he said. "But again, I can only speak for ourselves,"