Mic Drop #9: HBO Max's "For The Fans" 2021 Plans
WarnerMedia CEO Jason Kilar goes more "populist" than I had imagined in August
I connect the dots across the OTT streaming marketplace for your competitive edge at PARQOR.com. Here, I will be highlighting and celebrating “mic drops” on my predictions from past PARQOR Member mailings.
Back in August, I wrote on the blog about the launch of HBO Max: “A populist pivot for the HBO brand with the launch of HBO Max”:
I think the launch HBO Max marks a turn from curation to populism for the HBO brand, and for now, I cannot figure out if that is a good thing. Meaning, for decades HBO was happy with Richard Plepler’s “bespoke culture” and “More is not better, only better is better” approach to content. That has gone out the window with AT&T’s objective of more scale and more revenue. Harry Potter, Friends, Sesame Workshop, Looney Tunes, Fresh Prince of Bel Air… “better” has been diluted to mean “popular”.
The post was focused both on the break away from the legacy, “bespoke” HBO brand, and the new, User Interface/User Experience which “looks an awful lot like an in-flight entertainment experience which promotes all content” and “chooses no favorites”.
At the heart of the post was a key question: what does it mean for HBO as a brand and as a business to go from bespoke to populist?
“Collectively, the fans get to decide these things, as they should”
We got one heck of an answer yesterday from WarnerMedia CEO Jason Kilar:
In this post, Kilar refers to his earlier memo on Wonder Woman 1984’s release, where he spelled out what “for the fans” means:
We are, of course, in an extraordinary moment. This entails a patchwork of regulations, geographic considerations and, most importantly, fan preferences. With that in mind, we see an opportunity to do something firmly focused on the fans: give them the power to choose between going to their local cinema or opening HBO Max. Super-fans will likely choose both. This incredible movie will be available both ways on the exact same day. If you are fortunate to live in a place where theaters are open, we believe we are offering a great option given the Cinema Safe protocols our partners have put in place. With this, exhibitors are offering a movie-going experience with social distancing, masks, cleaning and ventilation protocols. On the other hand, if you and your family prefer to stay in and make your own popcorn this holiday, we want to share the experience of Wonder Woman 1984 with you the exact same day on HBO Max. It’s your decision to make.
We are committed to the theatrical experience and we believe giving exhibitors a movie of this nature is important right now. We believe in theaters because hundreds of millions of fans around the world value going to the movies. And for as long as fans seek out the theatrical experience, we will be there to serve them with great movies in partnership with exhibitors. Collectively, the fans get to decide these things, as they should.
Simply put, the decision to release the entire anticipated 17-film 2021 Warner Bros. motion picture slate in theaters and on HBO Max the same day in the United States, only, is naked populism. The COVID pandemic has opened the door to HBO Max being for the people, theatrical distribution economics be damned.
So, first, if I may:
Populism in HBO Max Content, too
I wrote back in August:
AT&T’s target audience is enormous, with an existing customer base of 170MM worldwide. HBO’s maximum audience of 34MM subscribers (plus another 8MM via DTC) implies the value proposition of “bespoke culture” means little to a broader audience, and therefore to the additional 20MM subscribers AT&T intends to add as subscribers over the next five years
Scott Porch of Decider had a terrific interview with HBO Max Chief Andy Forssell back in October, where there was an interesting quote about reaching a broader audience with shows like the now-buzzed-about The Flight Attendant:
I’m really excited about The Flight Attendant, and Kaley Cuoco is fantastic in this series. When you watch it, you’ll see that it’s a really good show that could have a big audience. It’s not second-tier or lower-quality than an HBO series, but it could reach a broader, younger audience than who a traditional HBO series would ordinarily appeal to.
That quote confirms what I suspected: HBO’s legacy “bespoke culture” means little to a broader, younger audience. Populism isn’t just about the fans, it’s the foundation of a new content strategy.
The Lingering Question
HBO Max’s marketing strategy is still stuck with a major problem: a populist approach is supposed to help drive more AT&T wireless and broadband subscribers to active their HBO Max accounts (all evidence suggests they are not doing so), and it is also supposed to attract new HBO Max subscribers.
MoffettNathanson predicts HBO Max would need to gain 8.4MM subscribers to mitigate a projected loss of $1.2B from WarnerMedia’s 2021 distribution strategy. Using that as a benchmark, AT&T will need to convert about 11% of its 76MM postpaid wireless subscribers to HBO Max subscribers over the next year.
That seems reasonable, as they have a built-in audience within their own private ecosystem of 176MM they can market to more cost-effectively than buying on third-party sites ( I wrote about this for Members this past week in Netflix ($NFLX), Gaming and “Change” in Streaming Marketing ).
But, they still struggle to convert these users: only 6MM of HBO’s 25MM Wholesale (basically, linear) subscribers have converted to HBO Max accounts over six months. That leaves 19MM who simply do not understand that they can upgrade for free. That also leaves a good percentage of 34.6MM non-Retail subscribers, 14MM Broadband Connections, and 76MM postpaid wireless subscribers who simply do not understand they can upgrade to HBO Max for free.
At the same time HBO Max is pushing out a growth-oriented and populist “for the fans” strategy, its subscriber numbers betray a story that it still doesn’t fully understand the fans it already has in its ecosystem.
8.4MM additional HBO Max subscribers seems so within in reach and yet so far away.
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