AT&T's (T) HBO Max service has a pretty solid content library, and should help lower churn rates among existing HBO subs. But for a few different reasons, it probably won't create a massive number of brand-new HBO subs in the near-term.
HBO Max, which launched in the U.S. on Wednesday, costs $14.99 per month and provides all of the content delivered by HBO's two existing streaming services -- HBO Go, which is bundled with HBO pay-TV subscriptions, and the standalone HBO Now service -- plus a host of other content. HBO Now users automatically have access to Max, as do consumers subscribing to HBO via pay-TV providers such as AT&T, Comcast (CMCSA) , Cox and Verizon (VZ) . Some AT&T mobile and Internet subs are also getting the service for no extra charge.
Hit HBO series' such as Game of Thrones and The Sopranos are covered by Max, as are (among other things) the Harry Potter movies, TV shows such as Friends and The Big Bang Theory, DC Comics movies, Cartoon Network shows, many classic films and a handful of HBO Max-only originals.
Though this is a very subjective thing, I think (after signing up for a free trial and browsing its library) HBO Max might have the best movie collection of any U.S. streaming service, with a very good mixture of recent hits and quality classic and indie/niche movies. And while its TV show/original series library can't match Netflix (NFLX) and Disney's (DIS) Hulu in terms of breadth, there's still a lot of quality material, particularly for fans of HBO originals.
The user interface isn't anything special right now -- among other things, it could stand to add trailers -- but is by no means awful. And like Disney's Disney+ service, HBO Max does a decent job of curating content based on both source (HBO, DC, Cartoon Network, etc.) and genre (action, drama, kids content, etc.).
For these reasons, someone who was already a satisfied HBO subscriber (whether via pay-TV or HBO Now) might now be an even more satisfied HBO sub, something that in turn could give HBO additional long-term pricing power. And perhaps some of the HBO subs who were previously on the fence about keeping their subscriptions might become less inclined to cancel following Max's launch.
But among U.S. consumers who weren't previously inclined to subscribe to one of HBO's services, HBO Max might only see moderate traction in the coming months.
First, as many others have pointed out, HBO Max doesn't currently work on Amazon.com's (AMZN) Fire TV platform, which has more than 40 million global active users, or on Roku's (ROKU) platform, which had 39.8 million active accounts at the end of March. The hold-ups appear to be about Roku and Amazon's cuts on sign-ups taking plans on their respective platforms, and about HBO Max's inclusion within Roku and Amazon's channel store apps. Regardless, until deals are inked, a lack of support for the two most popular living room streaming platforms will both affect new sign-ups and how much existing HBO subs engage with Max.
Then there's the matter of pricing. From AT&T/WarnerMedia's perspective, HBO Max's $15-per-month price probably looks aggressive, given that HBO Now has long cost that much. But from the perspective of a consumer who wasn't previously sold on signing up for an HBO service, things might look different.
HBO Max is costlier than Netflix's popular, $12.99-per-month, Standard plan, as well as Amazon Prime, which costs $119 per year and comes with a lot more than just a video streaming service. And it costs more than twice as much as Disney+, which sells for $6.99 per month and $69.99 per year.
At a time when Netflix and Amazon Prime both claim very strong customer loyalty and are believe to have 50%-plus U.S. household penetration rates, convincing Netflix/Prime households to pay a premium to get another streaming service will often be a tough sell. Disney understood this when it chose to give Disney+ a dirt-cheap launch price. And with Disney+ having racked up 54.5 million global subs (many of them in the U.S.) as of May 4, its adoption is another headwind for HBO Max's subscriber growth.
Throw in HBO Max's current lack of international availability and 4K streaming support, and how WarnerMedia's decision to simultaneously run three HBO-branded streaming services could confuse some consumers, and it's probably best to keep 2020 subscriber growth expectations for the service in check.
