HBO Max with Ads Launches promises “lowest commercial advertising load” in streaming – deadline
WarnerMedia’s long-awaited ad-supported tier of HBO Max officially launched today, promising the “lowest commercial ad load in the streaming industry.”
The company said the $ 10-month tier (a notable discount off the industry-high $ 15 price of the ad-free version) will be “rolled out throughout the day.” In its pre-launch presentation to media buyers last month, WarnerMedia said HBO Max would go live with ads in early June, but no date was given.
With a maximum of four minutes of advertising per hour – and none during HBO programming – the lower tier was seen internally as a major incentive for subscriptions. NBCUniversal’s Peacock and Discovery + are also in the same neighborhood. Discovery said it ended up with 4 minutes of advertising per hour, after initially scheduling five.
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A carve-out for subscribers of the cheaper tier is access to the latest releases of Warner Bros films such as the upcoming Space Jam and Matrix sequels. These films can only be seen by ad-free subscribers on opening day, although the ad-supported tier will get them in later release windows.
As of March 31, HBO Max and regular HBO had a combined 44.2 million subscribers, most of them linear for the time being. WarnerMedia raised its forecasts earlier this year to 120 to 150 million worldwide subscribers by 2025 and said the one-year service was ahead of the original forecasts. The expansion to dozen of territories outside of the United States will also begin this month. HBO Max’s first few months have been bumpy, in part due to the coronavirus pandemic, but also due to a vortex of old branding and distribution issues, as well as management and organizational upheavals.
AT&T announced last month that it was spinning WarnerMedia into a joint entity with Discovery, which should be completed in mid-2022.
Introducing an ad-supported tier after an ad-free tier was already in the market is a reversal of the path taken by services like Hulu and CBS All Access. The move is somewhat analogous to what the stations did in the early days of cable TV, including AMC, Bravo, and MTV, which initially started off ad-free before adding more sponsorship time as they grew. The dual revenue stream from subscriptions and advertising is a hallmark of the pay-TV business, and media companies see an opportunity to replicate it in streaming without sharing as much with the distributors in a direct-to-consumer model.
Netflix, Amazon Prime Video, and Disney + have a sizable head start in the streaming market without ads, but a variety of ad-supported streaming services have emerged in recent years, especially as the proliferation of smart TV and the use of connected TV have increased.
“Advertising is a proven way to lower the cost of great entertainment and reach a wider audience,” said HBO Max EVP & GM Andy Forssell. “We’ve worked hard to create a sleek, tasteful advertising experience that respects the great storytelling for those who choose it and that we believe will deliver to our advertising partners too.”
Ads on HBO Max, the company said, are “intended to complement and enhance the overall viewing experience and will be carefully displayed in the HBO Max content catalog in a manner that maintains the integrity of the program.”
More than 35 brands in all major categories are slated to go live on HBO Max this month.
JP Colcaco, head of advertising sales for WarnerMedia, said the new tier of HBO Max is “an innovative, premium streaming advertising experience” powered by personalization. “Together with our valued partners, we will continue to explore the art of what is possible in video advertising on all platforms,” he added.