Citing sources familiar with the matter, the Information reported that WarnerMedia parent AT&T has run into a number of issues with its ambitions of bringing a cheaper ad-supported tier to the HBO Max service, which combines all of WarnerMedia’s content with HBO’s legacy content, licensed movies, and new originals.
If HBO Max, for example, attempted to exclude ads from older HBO programming and new HBO Max originals on a cheaper, ad-supported tier, there wouldn’t be a lot of incentive for folks to cough up $15 a month for premium. (Unless they were really only subscribing for the other, non-HBO and HBO Max content, which seems exceptionally unlikely. ) Why would I pay $15 a month when I could get ad-free HBO and HBO Max stuff at a cheaper price?
AT&T chief John Stankey said earlier this year during an interview with Squawk Box that the company thinks “the long term dynamics will be both subscription and advertising supported. ” And while it’s easy to see that HBO Max was the brainchild of a room full of executives looking to squeeze assets for some fast cash, AT&T appears pretty well-positioned to shoot itself in the foot regardless of how it moves forward.
As WarnerMedia gears up for the release of a planned ad model for its recently launched HBO Max product, its parent company has reportedly run into a number of problems—including the fact that absolutely no one wants ads on premium content, including some of HBO’s business partners.