Here’s the math: Apple TV+ and Disney+ are priced at $4.99 and $6.99, respectively. HBOMax is a frothy $14.99. (It will launched in May 2020.)
Can HBO Max convince new streaming video customers it's worth three times -- or more -- the price of others? Sure, with a show like “Game of Thrones” perhaps. Ah.. but wait. ”Thrones” is over.
OK, HBO Max will have “Friends” reruns. Yes, just reruns. Was “Thrones” all that important? Remember, it was the most pirated program worldwide, according to some researchers. This isn’t to say HBO, which has a long history of producing strong popular-culture TV series (“The Sopranos,” “Sex and the City”) won’t figure out something.
Initial research will yield some tough marketing decisions. Many consumers buying into new streaming services -- including Netflix -- can focus on just a few -- perhaps one -- TV series. For Netflix, this might include original series like “Stranger Things,” “The Crown,” “Grace and Frankie” or reruns like “Friends” and “The Office.”
New streaming services closely identified with shows on their respective networks probably make for better brand association.
Think about the shows on CBS right now. With that in mind, could you make a leap to CBS All Access? Apple TV+? That might be difficult. For many, it might be just the new “The Morning Show” -- a highly touted series starting Jennifer Aniston and Reese Witherspoon.
But like CBS, Disney and HBO might have stronger brand associations. Disney with lots of big blockbuster action movies from Marvel and Lucasfilm, as well as more family-oriented films from Pixar.
HBO has a history of top premium programming. "Thrones" is a big example.
Still, HBO Max believes -- somehow -- its $14.99-a-month price tag will register more with consumers.
Perhaps this is because HBO, as a premium cable TV network, has, for years, been priced at $14 to $16 a month if added through a cable TV provider service, say from Comcast, Charter or Altice, or through a satellite TV service (DirecTV, Dish) or a telco provider (AT&T’s U-Verse, Verizon’s Fios). Will that kind of expectation move to the streaming side of the business?
Here is a recent note from Neil Begley, senior vice president at Moody’s Investor Service: “Relying on subscribers to recognize the price is fair in relation to the amount of content available on HBO Max, compared with other less-expensive services, is risky.”
Maybe HBO knows that billions in new TV and movie production for streaming services needs to find a decent financial equation. So place your bets. But don’t expect profits to follow anytime soon.