HBO Max launched last week! A $4 billion endeavor that required a monumental merger to make it happen. Can one measly column capture all my thoughts on HBO Max’s launch?
Of course not.
Strategic Thought – AT&T Really is Going “All In”
If you favor bold, decisive action in strategy—and I do—then AT&T deserves some applause. Two specific readings have helped push me further on this take, both quoted in my recent newsletter.
First, writing in TMT and Chill, anonymous Twitterzen Masa Capital makes the case that AT&T has made a big financial commitment. AT&T is devoting billions just to HBO Max, in addition to whatever they were going to spend at Warner Media, TNT/TBS, and HBO to make original content. That’s a financial spend many analysts said AT&T would never do.
Second came from Kirby Grines in his latest newsletter. AT&T isn’t just serious about spending money, but owning the customer relationship. That’s why AT&T “spent” the legitimate customer dissatisfaction of last week. Long term they know that controlling the data, identity and experience of customers will pay off long term.
In particular, last year Grines called out how bad Amazon Prime’s UX is for third party content. Frankly, Amazon doesn’t treat third party content well. So if you’re spending billions making content for HBO, is it worth it for Amazon to use your content simply to build their platform, while not even making it easy to use? Strategically, that’s a huge no.
(I mean, has Amazon launched customer profiles yet for Prime Video? For years they didn’t have that basic feature.)
It comes down to this: the streaming wars are divided into the major players and the niche players. Niche players will go to bundles like Amazon, Roku, Apple channels and Hulu and others. The major players will insist on their own apps.
So yes, AT&T really is all in. Because they insist on their own app.
Media Coverage – It Really Was Anemic
Are you really a major player if you launch and no one cares?
That was partly my take from the coverage. Yes, the usual Twitterati were obsessed by it. We always would be. But did regular America care? Not the way they cared about Disney. To use one example, the Byer’s Market newsletter put HBO Max news “below the fold” on the days up to and after launch. Facebook/Twitter drama beat it out.
Hey, bring some data to this, EntStrategyGuy. What does Google Trends look like?
Yikes. Maybe no one can catch up to Netflix.
My “Business” Review of HBO Max?
Given that the HBO Max that just launched is essentially the HBO Max we were promised last fall, I could just push you to my column form last November.
Now that’s it’s launched, do I have any priors to update? Sure, with the caveat that a lot of “reviews” of a new streamer are often excuses to just find examples to reinforce preconceived biases of whatever narrative we came in with. My process is always the “5Ps” of launching a streaming product: Product (Content), Product (UX), Placement (Distribution), Pricing and Promotion, which is how I’ll look at it.
From everything I see, this content really does rock. That was my take in the fall and using the service I still see that. From Harry Potter—the big surprise—to all the HBO content to lots and lots of movies, this is a strong lineup. (Also, kids content may be a secret source of strength.)
Warner Media also decided to have the content move in and out of the HBO Max catalogue. I’ll be honest, I love that decision. Given that customers can’t identify all the Warner Media content the way they can with Disney’s content, this will provide a lot of reasons for folks to keep their subscriptions.
Last point, since content is the most important piece, is that the loss of all the Warner Media/HBO content will be felt on Netflix, Amazon and Hulu. It’s such a big library that all the other libraries will get weaker.
It worked fine for me, though I had my gripes. The UX doesn’t let you turn off autoplay. For me, I can’t stand kids content that autoplays. It invariably causes fights with my daughter, especially if I miss the opportunity to disconnect. It also didn’t have any playback flaws, which is to be expected since HBO Now made up the backbone of the system, and it’s worked for years.
As for everyone else, some folks didn’t like it; others found it easy to use. So where does that leave me? Honestly, I’m gonna call it a “we don’t know” since that’s my call for most UX.
Also, I’m beginning to suspect that customers fall into two categories on UX: Those who want the unending scroll and those who don’t. Netflix and Prime Video will appeal to former; HBO and Disney+ to the latter. More to come.
If we’re judging on results, not the “why”, which I explained in my last column, this is bad. Getting near 100% distribution is key to reaching the most customers. As I just said, they’re in a majority of connected houses, but not over 80% as Disney was. While they’re on lots of cable providers, video games and Apple devices, the Roku and Amazon devices is a big black hole.
It’s expensive, that’s for sure. And we’re in a discounted streaming world right now. So this has to count as a negative as well. Is it a negative for HBO customers? No, but likely anyone who isn’t already “borrowing” HBO from a parent isn’t going to start paying for it at this price point.
They were never going to be able to promote as Disney could, but overall they’ve done a strong job. Not to mention, ad rates are so low right now I suspect they’re getting a terrific bang for their buck.
Add it all up?
Well, HBO Max has the content, but it’s expensive and not widely available. So not the worst launch, but definitely far from perfect.
The Lack of Datecdotes Is Deafening
This exchange on The Verge’s podcast is a must read for Julia Alexander’s dogged pursuit of a nugget of data. Anything to indicate it’s working.
Did she get any data? Nope. Meanwhile, the Sensor Tower data is all over the place. And no one has any leaks yet.
So my judgement? The lack of a datecdote on performance is probably a bad sign. Though it’s just the second quarter and we have a lot of game to play still.
First up, Andy’s Very Good Tweets asks…
Why has HBOMAx not just taken over the whole DC Universe library? DCU can’t be making enough to justify two streamers, especially with so much overlap, so what’s the sense in sharing licensing on many (but all) DC titles and only Doom Patrol from the originals?
Let me start by saying I have no inside information so can’t answer concretely. But this is the most glaring error on the platform. My second or third click on the website was the DC universe button, and the general impression was, “Eh.” Call it the inverse of when I clicked on the Marvel button.
My gut is that HBO Max wants to do the opposite of Disney and rotate content in and out frequently, promoting it when it comes in. Add to that the fact that Netflix still owns the rights to a lot of CW shows that streamed in the last decade, and potentially a lot of the best content just isn’t available.
Last note on this is that DC Universe is also an amalgam of both video content and digital comic book subscription. Which means Warner Media can’t just kill DC Universe and port it to HBO Max. Which means it’s tricky.
Takes on the decision to accelerate the release of Love Life. And if that means HBO Max may be considering stepping off the no #BingeAndBurn promise or not.
I bet this is a Jason Kilar special. Most digital media execs preach at the alter of binge model, and I could see Kilar coming in and insisting on this. The other potential explanation is that a lot of content was in production and crushed by Covid-19. Meaning, normally they would have so many originals they could space it out. As is, they need to keep folks on the site until new content arrives.
Are they right? Well, you know I love the weekly release if a show is a hit. But lots of customers don’t. (This could be the second big divide between customers: there are those who love the binge and those who hate it.)
Penultimate Point – The Big Negotiating Hold: Amazon is the New Standard Oil
Last week, I wrote a bit about Spotify’s monopoly play, and I’m returning to that well this week. Not because I want to focus on this issue, but because you can’t understand why Amazon is doing what it is doing without seeing the monopoly implications. It launched Prime Video using profits from AWS. It launched Fire TV the same way, mostly getting expansion by essentially giving away the sticks for free.
Now, Amazon wants its ROI on Fire TV.
That will come as a tax on applications on its service. This tax is passed on to both creators/talent—who will make less money—and customers—who have to pay more because of the tax to be on Amazon’s platform.
The counter is that Amazon is providing a unified platform. As one Twitterzen pointed out, it’s very convenient to have all your TV shows in one place. This is true.
Of course, if that’s the value Amazon is providing—in other words, the service Amazon offers—Amazon should actually pay streamers to be on its platform. If the value is bundling all the services, then they need to entice the streamers into that user experience. That’s what happened to cable providers. To get channels onto their services, they had to pay the channels a set amount per customer.
So why aren’t they? Because they’re betting on market power, not value creation. If they have market power, they can outlast their competitors.
Last Point – AT&T Wants to Be a Platform as Well
I speculated this back in the fall, when John Stankey rolled out his thoughts on HBO Max and I’m more convinced hearing the executives talk over the last week or so.
Part of the reason AT&T won’t just cave into Amazon Channels is that someday they’ll have AT&T channels as well. Heck, AT&T TV is essentially that, just not streaming focused. Yet.
It’s a monopolist’s world, we’re just living in it.