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Deeper Dive—AT&T outlines HBO Max AVOD distribution strategy - FierceVideo

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A cheaper, ad-supported HBO Max is only about a month away and while pricing and other details are still under wraps, AT&T’s AVOD distribution strategy is becoming clearer.

AT&T CEO John Stankey stressed how careful his company has been in maintaining direct customer relationships in negotiations with channel partners for HBO Max. It’s an approach that led to prolonged standoffs with major streaming platforms like Amazon and Roku, causing frustration for millions of streaming video consumers. However, Stankey said his company will be just as stringent when discussing terms for the ad-supported HBO Max.

“In some cases, we were criticized for taking a long time to get certain agreements worked out,” said Stankey, adding that his company refused to back off on ensuring that HBO Max distribution deals retained the ability for AT&T to talk with customers, bill customers, manage customer lifecycles, and control the user interface.

AT&T will be a “little more dependent on its owned and operated channels” for HBO Max AVOD distribution, Stankey said. “You’re going to see us use, for example, our own prepaid channels. But you’re not going to see us dramatically change our distribution strategy just to get volume.”

HBO Max sits at the high end of U.S. SVODs in terms of pricing, though its $14.99/month rate is only $1 more than Netflix’s most popular plan. Despite the relatively high price, HBO Max has been able to substantially grow its subscriber base, adding 2.7 million domestic subscribers during the most recent quarter. The service currently stands at 64 million global subscribers including 44.2 million domestic customers. Perhaps more importantly, HBO and HBO Max average revenue per user reached $11.72 during the quarter. That figure will likely decline when the HBO Max AVOD product enters the mix but any drops in ARPU will be offset somewhat by new advertising revenues rolling in.

HBO Max is seemingly ahead of the subscriber growth timeline AT&T laid out last month. The company expects to end 2021 with between 67 million and 70 million subscribers worldwide and anticipates amassing between 120 million and 150 million worldwide HBO Max and HBO subscribers by the end of 2025.

HBO Max currently has native apps on Amazon Fire TV, Android TV, Apple TV, PlayStation 4 and 5, Roku, Samsung smart TVs, and Xbox One and Series X/S along with Comcast and Cox cable boxes. Stankey said that AT&T is currently in discussions with existing HBO Max distributors and that it intends to make the AVOD product available to them under similar constructs to what it did in terms of economic incentives with the subscription product. But he sounded confident that HBO Max can continue to grow – while benefitting AT&T’s wireless and broadband businesses – even if partners struggle to reach terms for the ad-supported HBO Max.

“If they chose to carry it forward and it’s done in a way that we think is the right balance for our ability to manage that customer, we’ll extend it to them. If not, we’ll be moving it largely through our owned and operated channels if that’s what’s required,” Stankey said.

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Deeper Dive—AT&T outlines HBO Max AVOD distribution strategy - FierceVideo
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