WarnerMedia to launch ad-supported HBO Max for $9.99 a month

Yahoo Finance’s Alexandra Canal breaks down the competition in the streaming space.

Video Transcript

[MUSIC PLAYING]

ALEXIS CHRISTOFOROUS: In today’s “Fame and Fortune” segment, we’re to talk about Warner Media’s plans to charge you $10 bucks a month beginning in June for HBO Max with ads. We know the service without ads launched in May for $14.99 a month. Joining us now for the details on this is Ali Canal. And I know, Ali, the pay TV distributors are not too happy about this low-cost product.

ALEXANDRA CANAL: Yeah, they’re not. And this is still a report. Warner Media has not come out and confirmed this, but it is an interesting price point. $10 bucks a month for ad supported, if you compare that to some of the other ad-supported services out there on the market like Peacock or Paramount Plus, for example, that goes for $5 and $6 respectively. So $10, it seems a little high. And I spoke to an analyst this morning– Joe McCormick from Third Bridges– and he agreed with that. He said he’s worried a little bit that HBO Max is not going after the correct target audience here, so we’ll have to see what happens when they actually confirm that price point.

But overall, the streaming wars have been heating up and everyone keeps talking about that subscriber number. And since COVID hit, we saw a significant boom, but it’s clear that that’s sort of cooling right now. When Netflix reported earnings and they missed on that subscriber growth mark, the stock plummeted over 10%. Investors got a little spooked. So this is clearly in an effort to try and attract more subscribers here.

But I will say that the $9.99 version– that actually could be a pretty good deal because the only big difference that you’re missing here when you compare it with the soon-to-be premium option is access to those same-day theatrical releases. Now, for some, that might be very important. We have some big movies coming out like “Dune.” But keep in mind that those movies will only be available on HBO Max for the first 30 days. So it’s not even like you’ll have it forever if you’re paying for that premium subscription.

And if you’re a massive HBO fan, you are actually not going to experience any ads for those HBO original series. So that includes “Game of Thrones,” it includes “Succession.” So all of those big budget TV shows that we all know and love, you can still watch them on the ad-supported platform without any ads. So you might actually have some premium HBO Max subscribers go over to the ad-supported version, which should be pretty interesting, but we’ll have to see what happens.

ALEXIS CHRISTOFOROUS: So Ali, when it comes to the streaming wars, break it down for us. Who is leading the pack?

ALEXANDRA CANAL: You know, I still think Netflix is. We just came out of the Oscars. They won seven Oscars. And the breadth of content they have is just incredibly impressive. Not only do they have their original movies and TV shows, but they also have those documentaries. They also have those live action and animated shorts. And all of that content really did contribute to those Oscar wins.

But that doesn’t mean that other streamers can’t catch up. And I want to pull a chart up that we showed a little earlier when it came to who’s leading the pack in that IPTV service market. This is a new note from CBS. And it basically– IPTV is simply the delivery of TV services through an internet protocol suite. And if you take a look at the top streamers, HBO Max actually came at number one for the month of March. That’s up from that number three spot in February and actually taking Netflix’s place.

And then you see Amazon Prime, as well. It went from number seven to number four. And I think this all has to do with content HBO Max announced that there will be a new “Sex and the City” movie, they said they finally started shooting that “Friends” reunion, and that definitely drums up buzz and sort of convinces you to potentially try out this new service.

So I think content is the name of the game here. I think that’s why you’re seeing a lot of streamers spend a lot of money on content. Netflix recently spent $450 million for “Knives Out.” And that’s important because, all in all, it doesn’t really seem like price drives consumers. It’s really what content you have. And I think that is ultimately what it’s going to come down to for whoever ends up winning the streaming wars.

ALEXIS CHRISTOFOROUS: Yeah, the streaming wars are on full force.

ALEXANDRA CANAL: Always.

ALEXIS CHRISTOFOROUS: Ali Canal, thanks so much.

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