WarnerMedia plans to cost $ 9.99 per 30 days for ad-supported HBO Max

Robert Aramayo portrays a young Ned Stark in “Game of Thrones”.

Source: HBO

AT & T’s WarnerMedia plans to charge $ 9.99 per month for its ad-supported HBO Max service, which according to people familiar with the matter will roll out in June.

The ad-free version of HBO Max, which launched almost a year ago, costs $ 14.99 per month. That’s the same price HBO charges pay-TV subscribers who add the premium channel to their bundle.

AT&T said last week that HBO and HBO Max combined had 44.2 million U.S. subscribers. AT&T has completely restructured WarnerMedia to better compete with Netflix and other streaming services. With an ad-supported service for $ 9.99, HBO Max can be significantly cheaper than Netflix, which has a standard price of $ 13.99 per month. AT&T expects HBO Max and HBO to have between 120 and 150 million subscribers by the end of 2025.

John Stankey, chief executive of AT&T, told CNBC last week that the average revenue of HBO and HBO Max per user of $ 11.72 in the US was “really impressive.” He also noted that the ad-supported HBO Max will expand the product’s potential audience to include more cost-conscious consumers.

“Regardless of whether a customer buys the ad-supported product or the subscription-only product, this is equally beneficial for our company,” said Stankey. Giving consumers a choice of which version of HBO Max they prefer “is a strength” and “by no means admitting something went wrong. It has always been the plan,” he added.

WarnerMedia plans to only attach advertisements to programs exclusively available on HBO Max and not to pollute HBO shows with commercials, said Jason Kilar, CEO of WarnerMedia. Earlier last year, WarnerMedia had tentatively considered selling an ad-supported product with only HBO Max content for $ 4.99 a month, but that idea for a combined product with HBO was ditched, two respondents said because of The discussions that asked not to be named were private.

A WarnerMedia spokesman declined to comment.

Dealer dissatisfied

Pay TV retailers weren’t happy with AT & T’s decision to sell an ad-supported HBO product for $ 5 less than HBO, according to those familiar with the matter. Merchants share revenue with HBO for subscriptions that sell between 30% and 60% depending on the size. An operator like Comcast would take nearly $ 9 of a customer’s monthly fee of $ 15.

With an advertising streaming service, pay TV retailers are likely to get a lower percentage of the wholesale revenue share, but they also get other benefits like ad inventory, two of the respondents said. HBO is hoping to deliver ARPU for its ad-supported product at a cost of nearly $ 14.99, if not higher. If possible, the advertising inventory that is converted into distributors can be valuable enough to offset the differential loss in revenue sharing, said one respondent.

Most distributors are ready to take the product at $ 9.99 and market it to non-HBO subscribers and broadband-only customers, three of those surveyed said. AT&T has signed transport agreements for HBO Max after months of difficult negotiations with Amazon and Roku, the leading providers of streaming distributions. One of the biggest hurdles with both deals was dealing with the ad-supported service.

After both deals are closed, WarnerMedia no longer needs to return to Roku and Amazon to ensure distribution of the ad-supported product.

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