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CES 2020: HBO grappling with product differentiation, mulling AT&T bundling

Differentiation between HBO's streaming platforms, HBO Go and HBO Now, will only get more complicated with the 2020 launch of HBO Max, WarnerMedia executives said, adding that the company intends to simplify its distribution in 2020 and 2021.

HBO Max will include content from legacy premium cable network HBO / Cinemax (US) as well as film and TV content from Warner Bros. and Turner Entertainment Networks Inc., with overlapping content from TV everywhere platform HBO Go and subscription over-the-top streaming service HBO Now. Consumers are already unsure of the difference between the latter two platforms, said Andy Forssell, executive vice president and general manager of WarnerMedia's direct-to-consumer business.

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HBO Max logo
Source: WarnerMedia

HBO Max will potentially add to that confusion, the executive said, but added that "you will see it get a lot simpler in 2020 and you should see it get very simple in the year after that."

"We have to work with partners and there is a complex distribution system," Forssell said during a CES fireside chat. "We want to support those partners and those users, and make a road map to simplify that drastically."

When asked if parent company AT&T Inc. will sunset any of the existing platforms to roll them up into a single channel, Forssell declined to comment, citing a quiet period.

AT&T is also discussing internal options to bundle services across its TV, mobile and digital video distribution channels as well as provide as a service with premium broadband and wireless subscriptions. WarnerMedia is also in discussions with third-party distributors to bundle HBO Max elsewhere.

"We are talking to a lot of external partners because bundling, when done right, [is] good for consumers and it is good for the people that are part of the bundle," Forssell said.

Looking at mobile distribution, while competitors like Netflix Inc. and The Walt Disney Co.'s Hulu LLC see about 80% of viewing coming from living room TVs, Forssell believes there is an opportunity for mobile and short-form, and WarnerMedia will pursue those options.

One of the largest challenges is the user interface. He called navigating a large panel of apps on a TV screen the "the drudgery of the grid," and said the company is working on mobile interfaces that reduce that pain point and create an easier interface for short-form content, adding that WarnerMedia believes investments in mobile are "time well spent."

Forssell also reiterated the 50 million-subscriber forecast for HBO Max in the first five years in the face of recently launched competing services like Disney+ and Apple Inc.'s Apple TV+.

The OTT ecosystem is filling out rapidly, but given the variety of content between services, it is not a traditional competitive landscape, he said. His view is that consumers will pay for about two permanent OTT platforms and "dip in and out" of other platforms to consume new content.

"So it is not bad or good, it is just [about] what is the mix, and we will learn that over the next half decade," he said.