“It turns out most people on this planet are not wealthy.”
A sound reason to launch an ad-supported version of the still-new HBO Max streaming service that’s currently available only in an ad-free, $14.99-per-month version, said WarnerMedia CEO Jason Kilar, speaking Thursday morning at a Morgan Stanley investor conference.
The ad-free version, which may launch as soon as Q2, is designed to lower the price point and make Max accessible to a much broader pool of potential subscribers, while offering advertising in a personalized and “elegant” way that actually makes it “very helpful” to consumers, he said.
Once consumers see the offering that’s in development, Kilar said, he believes they’ll be excited about “how thoughtful” WarnerMedia has been in inserting advertising in a way that creates a “very organic” experience.
Kilar also again touted the growth of combined HBO and HBO Max users, which in the U.S. grew 20% year-over-year to reach 41.5 million by year-end 2020 — including 17.2 million Max activations.
That growth, including 6.9 million net new subscribers in Q4 2020 alone, put the HBO/HBO Max plan two years ahead of forecasts, according to WarnerMedia. Worldwide, HBO/HBO Max ended 2020 with 61 million subscribers.
“Customers have spoken,” declared Kilar. “You don’t have to be a rocket scientist to do the math and look at total revenue that’s being generated by HBO Max and HBO in the U.S. market,” he said, adding that the brand is, he assumes, “the number-two revenue-generating service in terms of direct consumer services.”
“It can take other companies a decade to get to where we are today,” he stressed.
Kilar also said that he feels “very good” about HBO Max’s ability to be among the relatively small number of streaming services for which the average household will prove willing to pay each month.
How many will that be? Kilar’s forecast is fewer than seven, and “possibly” fewer than six.
That’s on the high end, compared to the guesstimates that have been offered by other entertainment conglomerate honchos engaged in the streaming wars, as noted by CNBC.
While Starz CEO Jeffrey Hirsch has guessed that critical number at four to six, AT&T CEO John Stankey put it at four or five, and Hulu Director of Product Management Jason Wong believes it could be anywhere between three to five.
Viacom President/CEO Streaming Tom Ryan has said he’s confident the number will be five — and with the company’s Paramount+ making a late entry into the wars today, and several other streamers firmly entrenched or on their way, Viacom is making a big wager on there being room for at least a handful of services in most household budgets.