In addition to streaming Warner Bros. Pictures first-run movies, HBO Max’s major initiative in 2021 revolves around rolling out an ad-supported component to the platform’s SVOD legacy.
Speaking Jan. 5 on the virtual Citi Global TMT Conference, retiring CFO John Stephens (at the end of March) said AVOD enables WarnerMedia to expand its “available customer” footprint in the same way broadband and data plans have helped grow the cellular business.
“That’s what AVOD is going to help us do: expand the opportunity to serve customers in a different way,” he said.
As ad-supported VOD platforms proliferate in response to SVOD market domination by Netflix, Disney+, Hulu and Amazon Prime Video, the distribution channel, which includes The Roku Channel, IMDb TV, Pluto TV, Shout! Factory TV and Tubi, has been dogged by a dearth of higher profile content.
NBCUniversal’s Peacock streaming service, which launched in July as the market’s first hybrid SVOD/AVOD business model, is looking to change that. The ad-supported VOD option is targeting original content, including live sports such as the U.K.’s Premier League soccer to entice viewers.
AT&T CEO John Stankey told an investor even last year that live sports is an appealing component to OTT video in Europe.
“You’ll probably see as we move through AVOD, maybe we do some additional live work that we have coming forward,” he said.
Stephens said he fully expects AVOD to impact Max SVOD sub growth both positively and negatively, while at the same time luring non-SVOD consumers to the pay model.
“I see [AVOD] as an opportunity to serve additional customers, and from a finance perspective, amortize the investment in content over a greater customer base,” he said.