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This just feels like another AT&T muck-up of an acquired entertainment property. Their clumsy, idiotic and tone-deaf attempts to maximize monthly and quarterly revenues are at work again. They are hell bent on creating an ad-supported service that no creator of HBO original content wants sullied with ads and no advertisers seem interested in running their ads inside of The Sopranos or The Deuce. Seems like the only thing that will be accomplished here is alienating content creators from wanting to work with HBO in the future if their output will eventually be stuffed with unwanted ads.

If they want to increase the user base and ultimately profitability of HBO Max, how about prioritizing 4K HDR support to the stellar back catalog of HBO and Warner content? And perhaps getting deals in place with Roku and Amazon would help? They might find that there are 80 million users of those two platforms that might actually prefer paying for a premium 4K HDR ad-free experience if you just allowed them to. :unsure: :rolleyes:
Well, maximizing revenues are what successful businesses do. So I don't see how you can fault AT&T with trying to do that with their media properties like HBO Max.

The future of video entertainment, like the present, will be both ad-supported and ad-free. I think some folks wrongly assumed that because Netflix is ad-free that all streaming video in the future would be ad-free. But lots of people will willingly watch a certain amount of ads in exchange for video that's free or reduced in cost. YouTube and Hulu have proven this. Peacock is going hard in the ad-supported direction. IMO, Netflix is leaving money on the table by not doing what Hulu does and offering a lower cost version of the service with a limited amount of ads.

So I can understand WarnerMedia realizing that, in order to reach as many subscribers as possible and maximize revenues and profits, they need a lower-cost ad-supported play. The problem, though, is that they're trying to build their one major mainstream service around the premium, ad-free HBO brand. HBO Max has the premium HBO content at its core and then supplements that with other stuff -- it's sort of the streaming version of getting HBO plus a few basic cable channels. Except, right now, all of it is ad-free.

They could have instead gone the route that ViacomCBS is going; they have a mainstream "basic cable" type of service in the form of CBS All Access that can be had either with or without ads. And then they continue to run their premium service, Showtime, as a separate thing, always ad-free. And if you subscribe to both together, you get a bundling discount.

But how much excitement and subs would WarnerMedia have gotten if they launched "Warner Max" as a separate service without any of the HBO stuff? And could they have forced their HBO distributors to have included access to it for free along with an HBO subscription? And since it would have been a separate app from HBO Go/Now, would those 35 million HBO subs have even bothered to use the new Warner Max app? Because of the success of HBO, both in terms of brand equity as well as distribution penetration, you can see why they chose to simply build on it as their sole major streaming service.
 

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HBO was very profitable before AT&T came along, pulling in over $6 billion in profit over the previous 3 years. AT&T's problem is that they're trying to recoup the cost of some very poor purchasing decisions like buying DirecTV. AT&T is driven by investor returns, even if it means gutting a once very profitable and highly thought of property like HBO. AT&T wants to take the premier premium streaming channel and turn it into a provider of chopped up videos to play on cell phones. AT&T also has a terrible marketing dept, constantly turning out confusing and complicated products, literally using the "spaghetti against the wall" approach, and just confusing end users all the while.
 

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Probably because they ran the numbers and losing 50% of their subscription revenue to Amazon and Roku doesn't add up?
Hmm, that's not a very accurate article. Each and every distributor of ad free pay tv channels gets a cut of the monthly subscriber for having done the grunt work of selling to their customers. Ad supported cable channels, the cable system gets several commercial slots per hour to sell local/regional ads.

ATT has allowed cable distributors to keep the same cut they've always had-but have singled out only Roku and Amazon for reductions, asking them to accept less for the same work and less ad profit sharing for the upcoming ad free H-Max. If everyone had been asked to take less, then Amazon and Roku would be in the wrong for wanting to maintain the prior profit terms. Comcast is using Peacock the same. ATT and Comcast want to cut in on the internet distributor business, and which is why they are leaning hard on blaming Roku and Amazon being 'difficult' in negotiations.
 

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Hmm, that's not a very accurate article. Each and every distributor of ad free pay tv channels gets a cut of the monthly subscriber for having done the grunt work of selling to their customers. Ad supported cable channels, the cable system gets several commercial slots per hour to sell local/regional ads.

ATT has allowed cable distributors to keep the same cut they've always had-but have singled out only Roku and Amazon for reductions, asking them to accept less for the same work and less ad profit sharing for the upcoming ad free H-Max. If everyone had been asked to take less, then Amazon and Roku would be in the wrong for wanting to maintain the prior profit terms. Comcast is using Peacock the same. ATT and Comcast want to cut in on the internet distributor business, and which is why they are leaning hard on blaming Roku and Amazon being 'difficult' in negotiations.
Except that everyone else -- Apple, Google, Comcast, Charter, Verizon, Hulu, etc. -- accepted the distribution terms for HBO Max. Only Amazon and Roku balked, continuing to insist on special treatment over three months later, depriving their HBO subscribers of lots of additional "Max" content. They're the outliers, whether you consider them "difficult" or just shrewd negotiators.
 

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Well, maximizing revenues are what successful businesses do. So I don't see how you can fault AT&T with trying to do that with their media properties like HBO Max.
They aren't currently being very successful at generating revenue on their new platform. They seem to be under the mistaken impression that their content is worth as much in the streaming world as it used to be in the old cable model. Looking at what Netflix costs and what you get for the money should show them it isn't.
 

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Only Amazon and Roku balked, continuing to insist on special treatment over three months later, depriving their HBO subscribers of lots of additional "Max" content. They're the outliers, whether you consider them "difficult" or just shrewd negotiators.
Outlier is in the eye of the beholder. There are hundreds of streaming services, both subscription based and ad-supported, that have come to terms with Roku and Amazon. Only two recent entrants (HBO Max and Peacock) have not.
 

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Outlier is in the eye of the beholder. There are hundreds of streaming services, both subscription based and ad-supported, that have come to terms with Roku and Amazon. Only two recent entrants (HBO Max and Peacock) have not.
Which indicates that Roku and Amazon are, as reported, getting more aggressive in the terms they're demanding from streaming services to be carried on their platforms.
 

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They aren't currently being very successful at generating revenue on their new platform. They seem to be under the mistaken impression that their content is worth as much in the streaming world as it used to be in the old cable model. Looking at what Netflix costs and what you get for the money should show them it isn't.
HBO is still mainly a product distributed and consumed through the cable TV ecosystem, although it's transitioning over to streaming via HBO Max. It will be a long evolution. And total HBO subscriptions are up (a few million, I think) since the launch of HBO Max. So yeah, they're succeeding at generating additional revenue.

Netflix is an outlier in terms of the amount of content offered relative to the cost of the service. Investors have been OK with the large amount of debt that Netflix has incurred to produce/procure more content because it has led to ever-increasing subscriber numbers. But at some point that dynamic will have to change. Netflix is pretty close to saturating the domestic market and the rise of all these new SVODs only makes that more true. They're largely looking to foreign markets for growth now. They won't be able to perpetually spend on new content at the same rate (and an increasing share of that new content with be non-English language too).

All of that doesn't mean that Netflix won't remain in the lead among SVODs. Just that the amount of content you get vs. the price you pay for it will eventually revert towards the industry mean.
 

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HBO is still mainly a product distributed and consumed through the cable TV ecosystem, although it's transitioning over to streaming via HBO Max. It will be a long evolution. And total HBO subscriptions are up (a few million, I think) since the launch of HBO Max. So yeah, they're succeeding at generating additional revenue.
The few million new HBO subscriptions are almost all people getting it free with their gig Internet or unlimited wireless plans (like yours truly). Actual paying subscriber (and therefore revenue) growth is negligible. Sorry, but AT&T are a bunch of idiots. Until they make deals with Amazon and Roku, HBOMax subscriber numbers going to continue to languish, and ad-supported+fees isn't going to sell well either, especially if customers can't get it on their cheap streaming stick.

As for Netflix, they are really smart. Yes, they have a lot of debt. Certainly more than I would have been comfortable with if I were running the company, but they have essentially built a studio from scratch, and that takes some dough. They also know that theirs is the app people are least willing to give up. The stickiness of their customer base is very high, which makes the debt a bit safer. As for growth, Netflix still has a few years of runway before they need to really worry about that in earnest. The abandonment of Net Neutrality is probably the biggest risk when you consider some of their biggest competition in the US also owns the pipes (Comcast/Universal AT&T/Warner). Carriage fees could ultimately force Netflix to raise prices to unsustainable levels which would lead to subscriber loss.
 

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HBO Max keeps doing this $12 a month deal, which is less than I pay for Netflix and less than the price to add it to a cable TV subscription. But I suspect they have to keep their $15 a month rack rate to be compliant with their existing terms with cable operators to not undercut their normal cable TV retail price.

Do I wish it was cheaper and available on more platforms? Sure. But its really not too bad a value considering how deep the catalog is, imo, if the percent of time we find ourselves using the service is any indication.

(It is annoying that to get year two at the $12 price I have to cancel the old subscription, let it lapse a day, and then re-up with a coupon for year two. And it would be nice if I could use it on my old FireTV stick, though as luck would have it, we primarily use AppleTVs for steaming, so in our case, that worked out fine. If we were a Roku or FireTV based household, or were expecting it to be added to our of our TVs, that would be frustrating for sure.)
 

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HBO Max keeps doing this $12 a month deal, which is less than I pay for Netflix and less than the price to add it to a cable TV subscription. But I suspect they have to keep their $15 a month rack rate to be compliant with their existing terms with cable operators to not undercut their normal cable TV retail price.
Comcast is currently offering the same $12 discounted rate for the first year.
 

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Which indicates that Roku and Amazon are, as reported, getting more aggressive in the terms they're demanding from streaming services to be carried on their platforms.
Well, maximizing revenues are what successful businesses do. So I don't see how you can fault AT&T Roku and Amazon with trying to do that with their media properties streaming platforms. :D

I don't think it is a coincidence that two old-school monopolistic cable distributors entering the OTT streaming market are at odds with the two dominant OTT streaming platforms.

'Old-Guard' greed vs. 'New-Guard' greed. And us poor saps stuck in the middle deciding how many different streaming devices can be justified. :mad:
 

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HBO Max Ad Plan Could Pair Commercials With Movie Classics

Looks like they are refining their ad-supported strategy.

I wish they would put as much effort into delivering 4K HDR ATMOS support and a permanent back catalog of IP content, instead of a monthly rolling catalog. :whistle:
 
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Max should drop their price to $12, and the same for HBO ON cable.


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Max should drop their price to $12, and the same for HBO ON cable.
I don't think they can based on guaranteed pricing they have in place with cable providers. They can't undercut the $14.99 they contracted with cable providers. I am guessing this one-year one-off special pricing is an exception.
 
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Until they make deals with Amazon and Roku, HBOMax subscriber numbers going to continue to languish,
At the end of the day, whether someone spends $15/mo on HBO (via Roku/Amazon) or $15/mo on HBO Max (via everyone else), they're still subscribing to some form of HBO and WarnerMedia is making money. If owners of Roku and Fire TV devices are content paying the same price to get half the content, well, that's their decision. But in assessing the performance of HBO, you have to look at the overall product platform, of which HBO Max (the shiny new brand name/streaming app) is just a part. Remember that both existing subs and new sign-ups can still get the core HBO product on both Roku and Fire TV, for now anyway.

As for prospects for the HBO Max app itself, keep in mind that a large and growing number of folks use streaming apps on their smart TV, cable box or game system. HBO Max will be coming to X1 soon, it's already on Samsung smart TVs and those running Android TV (from Sony, Hisense and TCL). I'd expect it sooner or later on LG and Vizio smart TVs too. Already on Xbox. And then there's Google, who's set to make a splash with their 4K HDR dongle rumored to cost $50-60 and rolling out at the end of this month. If HBO Max and Peacock are still missing from Roku and Fire TV this holiday season, Google's device will sell especially well.

and ad-supported+fees isn't going to sell well either
Yeah, that model has been a disaster for Hulu and CBS AA, right?

As for Netflix, they are really smart. Yes, they have a lot of debt. Certainly more than I would have been comfortable with if I were running the company, but they have essentially built a studio from scratch, and that takes some dough. They also know that theirs is the app people are least willing to give up. The stickiness of their customer base is very high, which makes the debt a bit safer.
A lot of Netflix's success is due to first-mover advantage. But you do have to give them credit for predicting where entertainment would be going: online, with the outlet owning their content (although it was HBO who had pioneered that part of the model).

From what I've read, Netflix's strategy over the past 2-3 years has been to produce a torrent of new original content to build up their library in anticipation of recognizable licensed content (e.g. Friends, The Office, etc.) being reclaimed by new DTC services. After that, I think, the plan was to slow down on their content expenditures because that debt-fueled pace probably wasn't sustainable indefinitely.

I'm wondering what the impact on subscriber count/stickiness will be if the pace of new content launching each month does slow down (which probably also means the frequency of breakthrough hits slows does too). It's one thing when you have a back library of recognizable series and movies that succeeded elsewhere in years past but it's another when your back library consists of a lot of Netflix Originals that got lost in the shuffle, never became brand names, and then got cancelled after a couple of seasons. In between sampling fresh new shows, will Netflix subs be interested in going back and trying Girlboss or Between or Sense8? Scrolling through Netflix feels sort of like shopping at one of those discount grocery stores where you recognize relatively few of the brand names. "Is this stuff any good? Never heard of it."

So, yes, Netflix has created a studio from scratch and they've undoubtedly created a handful of lasting hits such as Stranger Things, The Crown and Ozark. But I'm not sure I think their practice of throwing money at just about every idea that was pitched to them was the best use of all that cash they borrowed. They've got a ton of straight-to-video type stuff on their hands that never got much buzz and now never will and, IMO, has limited value as library filler.
 

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Yeah, that model has been a disaster for Hulu and CBS AA, right?
Well, after 10 years, Hulu is still barely making a profit. CBS talks a big game about AA, but they don't seem to break out how profitable it really is on its own. Mostly they talk about how content licensing is making them lots of money. That is putting their stuff on other people's platforms. It isn't really clear how much of the revenue for these platforms comes from ads vs. subscription fees. They do have lots of subs though -- probably because they are on Roku and Amazon.
At the end of the day, whether someone spends $15/mo on HBO (via Roku/Amazon) or $15/mo on HBO Max (via everyone else), they're still subscribing to some form of HBO and WarnerMedia is making money.
You've hit the nail on the head. This is exactly what AT&T seems to miss about Roku/Amazon. It is better to make one dollar than zero dollars. Especially if 70% of the market is unavailable to make two dollars from. This is also important as the majority of smartTV growth is coming from sets with Roku and Amazon software built in. Do I think that Roku and Amazon deserve 50% of the revenue? No, and I don't think Apple and Google app stores deserve 30% either, but that is the playing field.
 

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This is exactly what AT&T seems to miss about Roku/Amazon. It is better to make one dollar than zero dollars.
To be fair, they are not making zero dollars. HBO is on those platforms and they still make $15 a month from it. It's just that HBOMAX is not there.

Would they get more subscribers if HBOMAX was there? Probably.

Would it be a lot more subscribers?

Would it be enough more profit to offset the perceived danger of the extreme "tax" those platforms want to charge for HBOMAX?

Apparently Warner doesn't think so. Maybe they are playing chicken, maybe they are laughing at still raking in money from those platforms even without MAX being on them.

Meanwhile users like us are stuck in the middle. But I can't say I'd do things differently if I were Warner.
 
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