December 4, 2018
With WarnerMedia launching a branded subscription streaming video platform next year that will incorporate original and catalog content from HBO, Warner Bros. and Turner, in addition to third-party providers, the question arises: What will become of standalone SVOD service HBO Now?
Launched in 2014, HBO Now topped 5 million subscribers earlier this year. WarnerMedia is wrapping much of its unnamed OTT product around the HBO brand, with tiers of service ranging from studio movies to original series such as “Game of Thrones” and “Westworld,” among others.
Speaking Dec. 4 at the UBS 46th Annual Global Media and Communications confab in New York, AT&T CEO Randall Stephenson reiterated that the WarnerMedia streaming platform would not be another Netflix — focusing instead on Warner, HBO and Turner content.
“The goal of [CEO] John Stankey and WarnerMedia is not to create a direct-to-consumer product that rivals Netflix in terms of being a warehouse of content,” he said, adding that traditional pay-TV business models distributing wholesale content are old-school.
“Those businesses are getting disrupted aggressively,” Stephenson said.
The executive said the market needs an OTT product that “can achieve a very high penetration of [WarnerMedia] content with audiences.”
And HBO — via HBO Now — has its foot in the door.
“All media companies are coming to grips with the reality to better establish a direct relationship with [their] audiences,” Stephenson said. And with more than 140 million pay-TV subscribers globally, HBO resonates.
“I once compared Netflix to Walmart — not derogatorily … but when I’m shopping [and] I need something … I go to Walmart,” Stephenson said. “Well, if you’re looking for video content, regardless what it is, people will go to Netflix because it is just a warehouse. And it’s an impressive warehouse. That is not our ambition.”
Stephenson said management recognizes the need to ramp up original content spending at HBO — infusing the platform with year-long new offerings in addition to platform investment.
“[HBO boss] Richard Plepler is pretty excited,” Stephenson said. “He knows how to put together programming that will attract audiences. We’re very confident we’re going to have an HBO product that’s more fulsome.”
With WarnerMedia representing 17% of AT&T’s profitability, Stephenson said Warner Bros. remains a significant creator of TV content — including producing 70 scripted TV series in the past year to third parties including Netflix.
The executive mentioned Netflix had resigned license rights to Warner Bros.’ venerable sitcom “Friends” on a non-exclusive basis.
“That means ‘Friends’ can go onto our platform as well,” Stephenson said.
“We think we have enough IP and capability we can put together a product that will be very attractive,” he said. “It’s not a pervasive library of content warehouse like Netflix, but we think it is a very impressive product that will achieve very high penetration. Expectations are very high for this product.”