HBO Max Is Officially Launching a Cheaper Ad-Supported Streaming Plan in June

Illustration for article titled HBO Max Is Officially Launching a Cheaper Ad-Supported Streaming Plan in June
Photo: Presley Ann (Getty Images)

The long-expected ad-supported tier of HBO Max will finally arrive this summer.

Company executives on Friday revealed details relating to both the expected launch window for the new tier as well as how it will differ from HBO Max’s existing subscription plan. The primary difference between the two will center on WarnerMedia’s 2021 films, which are releasing through a hybrid model on HBO Max the same day that they debut in theaters. After the ad-supported plan launches, the films will be limited to the more expensive of the two subscriptions.

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A spokesperson for the company additionally confirmed to Gizmodo that ads will not appear on originals.

The company also teased some ambitious subscriber projections for the next four years. AT&T announced that it expects its HBO and HBO Max subscribers to reach 120-150 million subscriptions by 2025. That’s a fairly large jump from the 17.17 million “activated” users that the company reported in January. For reference, Disney+ recently reported more than 100 million subscriptions just 16 months after its launch, while Netflix surpassed the 200 million mark in January. But these two giants are far ahead of the pack with respect to growth, and neither puts ads on its content.

AT&T is banking on this cheaper ad-supported model to help it scale. But it wasn’t immediately clear how much the cheaper tier would cost. WarnerMedia CEO Jason Kilar—who has previously said of an ad-supported HBO Max that “most people on this planet are not wealthy”—said that the company would announce pricing “in the coming months.”

However, Kilar did indicate the company is carefully considering how pricing for the new tier will impact its long-term goals, saying, “We’re capitalists, and I want everyone on this call to know we are capitalists.”

“We think very, very carefully about the net present value of free cash flow,” he said. “I feel very, very good about our ability to cover whatever price break is given to consumers and maybe then some.”

Luring subscribers with a cheaper, ad-supported tier may help the company scale in the short-term, but it’s worth wondering how the company plans to distinguish greater value on the premium tier in the long-term. Sure, the more expensive plan will be free from ads. But what happens when theaters reopen? Does WarnerMedia expect to release its films concurrently on its service’s premium tier as well as in theaters in perpetuity?

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Particularly if HBO and HBO Max originals remain free from ads on even the free tier—which they should if WarnerMedia hopes to retain the talent and relationships it has with creators—then what’s to keep subscribers on the more expensive plan once its 2021 movie pipeline runs dry?

In any event, it looks like AT&T executives are about to find out.

Clarification: An HBO Max spokesperson clarified that ads will not appear on originals on the cheaper plan.

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DISCUSSION

I get HBOMax free due to my ATT phone plans.  You just know they’re going to switch me over, dammit.