WarnerMedia is continuing to ratchet up the pressure on Netflix by offering an advert-supported version of HBO Max for just $9.99 a month.
Currently, Netflix costs $13.99 a month for a standard package, so this new entry-level tier of HBO Max is significantly cheaper. An ad-free subscription to HBO Max will run you $14.99 a month, so there’s even the chance that a few current subscribers may switch over when the ad-supported membership tier launches this June.
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On the surface any ads on a streaming service might sound like a raw deal. But the ad-supported HBO Max tier only attaches advertisements to programs available exclusively on HBO Max (such as Love Life, Doom Patrol, and An American Pickle) and not regular HBO shows like Succession, Westworld and Game of Thrones.
In short, any HBO show you can access through a TV subscription won’t have commercials, whereas anything that is streaming exclusive will. It’s an important distinction and helps to make the $9.99 a month subscription fee pretty attractive, especially when you consider the wealth of critical-acclaimed content that HBO has created over the years.
Currently, HBO and HBO Max have a combined 44.2 million subscribers in the U.S., but AT&T (WarnerMedia's parent company) has lofty goals to achieve between 120 million and 150 million subscribers by the end of 2025. This aggressive pricing strategy shows how seriously these targets are being taken.
AT&T’s Chief Executive John Stankey told CNBC the average revenue per HBO and HBO Max subscribers was $11.72 a month, which he dubbed “really impressive." He also outlined the company’s desire to appeal to more cost-conscious consumers; a demographic this ad-supported version of HBO Max is clearly targeting.
“Whether a customer chooses to buy the ad-supported product or buy the straight subscription product, it’s accretive in the same ways to our business," said Stankey.
With HBO Max having dominated the streaming conversation so far this year, thanks to day-and-date movie releases including the Synder Cut and Godzilla vs Kong, Netflix might be further sweating over this new membership offering cutting deeper into its revenue.
The news that the red streaming giant lost more than 30% of its market share over the past year, is more evidence that Netflix is no longer the unassailable behemoth that it once was. The streaming wars are only going to get more fierce from here.