Stankey: HBO Max Price Point ‘Compelling’

WarnerMedia chief says streaming service offers twice the content as traditional HBO
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WarnerMedia CEO John Stankey told an industry audience Tuesday that he believes consumers will find the $14.99 monthly price point of its HBO Max streaming video product compelling because it offers more content than its cheaper competitors like Disney + and Apple TV Plus.

Speaking at the UBS Global TMT Conference in New York, Stankey said criticism around HBO Max pricing is unwarranted. HBO Max, which is scheduled to be available in May, is more than double the $6.99 price point for Disney + and triple the $4.99 Apple charges for its Apple TV Plus service.

Stankey, who also is president and COO of AT&T, was filling in for his boss, AT&T chairman and CEO Randall Stephenson, who was originally scheduled to speak at the conference.

Stankey said HBO Max has twice the content of the Disney + service, and that the HBO product is targeted at the entire household while the Disney + service appeals to a younger audience.

“It’s not that deep,” Stankey said of the Disney + service. "There's some stuff that is interesting to adults in the offer and some stuff that's probably interesting to your 20-something and 30-something year-old members of your family, but it's not all that deep in that regard. Max is."

He added that HBO Max appeals to the entire family and the family wireless plan, especially to older family members who pay the bills.

"We know from our experience with HBO that attaching content to a connectivity service has churn benefits," Stankey said. "I don't think we have to debate that, we've got every other wireless providers trying to do something like that."

Stankey pointed to Verizon Wireless' promotional relationship with Disney + and T-Mobile's partnerships with Netflix.

"We see the same thing with HBO," Stankey said, adding that the one of the limits for HBO is that its subscriber demographics tend to skew older and a little more affluent.

"Most of your young kids in your house aren't thinking about what next HBO show they want to watch," Stankey said. "We tend to skew a little bit higher on socioeconomic and age demographics. We'd like to bring that down a bit. That's what Max allows us to do."

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He added that there is room for multiple direct-to-consumer services in the home, comparing the launches of the new offerings to Netflix’s streaming debut several years ago.

“You would be hard pressed to suggest that Disney+ is a replacement service for Netflix,” Stankey said. “You would be hard pressed to say Disney+ is a replacement for [HBO] MAX. They are two different services and they are addressing different market segments."

Stankey also addressed concerns that HBO Max will face resistance from distributors, who will likely receive a smaller revenue share with the new service. He said that talks with distributors are ongoing and was optimistic deals will be reached.

"We're in the heart of them now," Stankey said of the talks, adding that as is the case with most carriage negotiations, there is a period of "posturing" followed by intense work to get a deal done as the deadline comes near.

"I don't expect that these discussions are going to be a whole lot different," Stankey said. "Each side has been stating their position. I'm not surprised by any of the positions that are being taken. That dialog has begun. ...I think what is important to understand is at the end of the day, is this is something a distributor would want to participate in? I think the answer is yes."