Almost all of the executives who spoke to CNBC — including several still at WarnerMedia — felt the HBO Max experiment isn’t going particularly well so far.
Only 8.6 million people have signed up to activate the service since it launched in May. Compare this to
Disney, which
has signed up 73.7 million people for Disney+ in less than a year.
“Jason’s belief is — wrongly — if any piece of content available anywhere other than HBO Max, it cheapens HBO Max,” said one recently departed executive. “Jason is forgoing billions in revenue by turning his back on licensing to preserve content for HBO.”
By pricing HBO Max the same as HBO, Stankey seemed to assume HBO users would simply switch to HBO Max over time. But the transition has been slow, as pay TV and streaming distributors — once HBO’s needed partners — have little incentive to market HBO Max to the millions of people who already get HBO.
“The risk here is that they end up pouring all of their Warner Bros. Studios content into HBO Max only for it to continue to be a premium service that serves only the top third of households,” said MoffettNathanson analyst Craig Moffett. “There’s a real risk that 1+1+1=1 here, and that all that will be left of Warner Media when they are finished is an HBO division that is more or less the same size as it was when they started.”
One problem is HBO Max has no tent-pole original series to jumpstart subscribers, like Disney+ has
with “The Mandalorian.” That’s partly because, after the delay from the battle with the U.S. government, Stankey wanted to get the service out fast, according to people familiar with the matter. The coronavirus pandemic lockdowns in 2020 also delayed the creation and filming of new material.
The rushed launch has also affected distribution. WarnerMedia held out on a streaming distribution deal with Amazon for months to get friendlier terms and still hasn’t reached a deal with
Roku. Kilar’s decision to release the 2021 Warner Bros. slate of movies on HBO Max concurrently with theater distribution could put more pressure on Roku to reach a deal. (Spokespeople at WarnerMedia and Roku declined to comment.)
Then there’s
the confusing branding around HBO Max, which initially joined a plethora of similarly named services, including HBO, HBO Go, and HBO Now. Although WarnerMedia
finally got around to retiring HBO Go and changing HBO Now to simply ‘HBO’ in June, several employees in charge of marketing and branding acknowledged the changes should have come much sooner, before HBO Max ever launched.