From Elmo to Tony Soprano: HBO Max's Game Plan as Told By Two of Its Creators
Sam primarily covers entertainment and media for dot.LA. Previously he was Marjorie Deane Fellow at The Economist, where he wrote for the business and finance sections of the print edition. He has also worked at the XPRIZE Foundation, U.S. Government Accountability Office, KCRW, and MLB Advanced Media (now Disney Streaming Services). He holds an MBA from UCLA Anderson, an MPP from UCLA Luskin and a BA in History from University of Michigan. Email him at samblake@dot.LA and find him on Twitter @hisamblake
HBO Max, the new streaming service from AT&T's WarnerMedia, launches Wednesday. Advertised as the place "where HBO meets so much more", HBO Max will debut with over 10,000 hours of content from a range of brands including HBO, Warner Bros., Cartoon Network and Turner, with characters as diverse as Elmo and Tony Soprano. This marks a culminating milestone in AT&T's massive integration that began in 2016 when it agreed to acquire Time Warner for $85.4 billion.
Widely viewed as both a streaming offering for content-hungry viewers, and as a value-add for AT&T's customers, HBO Max will hope to effectively absorb the 30 million or so current HBO customers into its initial subscriber count. Despite the head start, and the track records of a century-old studio and TV's most prestigious channel, industry onlookers have highlighted several challenges facing the new service.
HBO Max launches with over 10,000 titles across a range of content brands
One is its price. At $15 per month, HBO Max will cost more than any of its competitors in the video streaming space. That takes on greater weight given the number of competitors, including Netflix, Disney+, Amazon Prime Video, and NBCU's Peacock – all of which charge less than HBO Max. Then there is the fear of brand dilution. To grow the plateauing HBO subscriber base, HBO Max is staking out a competitive position built upon a broad mix of content ranging from upscale HBO series to more middlebrow fare like Big Bang Theory.
dot.LA caught up with two HBO Max leaders to learn about the key decisions leading to today and to explore the path ahead. Tony Goncalves oversees HBO Max's product, performance marketing, and data & analytics. Reporting to chairman Bob Greenblatt, Goncalves also runs Otter Media, a WarnerMedia subsidiary that houses several digital content companies. Goncalves spearheaded AT&T's acquisition of Time Warner and formerly led DirecTV's expansion into mobile content. Sarah Lyons, senior vice president of HBO Max's product experience, provided additional comment.
dot.LA: To stand out in this competitive space, it obviously helps to have good content, good data, and a good user experience. But what can you do if everyone else has those, too?
Goncalves: I think it's a misnomer that we're all competing to be the one platform that consumers go to. A variety of us are going to offer these platforms and consumers will have more than one. These new "super-networks" are emerging, in the form of an app that aggregates lots of content, and you stand out by what stories you're aggregating, and how you're curating and presenting them. The data tells us that consumers have 2-3 services today and are willing to pay for up to 4-6 — so our goal is to be one of those 4-6.
HBO Max users will be able to browse by "hub"
Lyons: We looked at research into consumer sentiment and saw that consumers value the experience just as much as they do the content. There's a common problem among customers with finding something to watch, because there's a sea of content out there. They're not quite confident that when they start a new show, it will be time well spent. We talked to them about that and learned on average it takes about nine minutes to find something to watch — and that 20% of them abandon it altogether because they get frustrated and give up. When we asked about recommendation engines, they started to kind of recoil; they had a visceral reaction. They'd say, 'How could a robot purport to know who I am or what I want?' They felt boxed in. So we kept all of that in mind as we were creating the product experience, and we felt like we had an opportunity to create a sweet spot with a service that blends the human touch in curation with underlying data for personalization.
Goncalves: We believe the opportunity is to present consumers a clean, clutterless experience and get away from that endless scroll by giving consumers the confidence that when they press on a tile, they'll be taken into a great story — which is not necessarily the case in the marketplace today. That's a real opportunity for differentiation.
In developing your launch slate of content, how did you decide how much original content you needed, how much catalog content you needed, and what kind of each?
Goncalves: If there were a formula, I'd be happy to walk you through that. But the reality is we had to
step back and define what we wanted to be when we grew up. We started with this incredibly valuable anchor of HBO. We were extremely fortunate that the service had garnered over 30 million paying subscribers over the years, but it had essentially peaked. So we started with the demographic we had — higher-income households, a bit more male — then morphed our programming to grow around that.
Lyons: The conundrum was how do you take those existing users and give them a new experience while keeping them comfortable, and at the same time target a new set of subscribers that are millennials, Gen Z, families, females, kids of all ages. How do you add them and keep the experience fresh and add all the content that goes along with it, yet keep it premium while not alienating subscribers? It was all a balance.
How do you approach the role of original versus licensed content?
Goncalves: You tend to see in the data that originals are the titles that drive people to subscribe, whereas the licensed content is what garners the engagement thereafter and keeps consumers on these platforms.
There's some concern that customers may be confused about the various HBO options – HBO, HBO Go, HBO Now, HBO Max — and, on top of that, people may be unclear about what they're entitled to based on their current HBO situation. AT&T is still negotiating with Comcast, as well as Amazon and Roku – which together control nearly 70% of the streaming device market – but as of today there are no agreements to bring HBO Max to those users. To what extent are you hopeful about resolving those negotiations?
Goncalves: I can't get into specifics of the negotiations themselves. But as we go forward, we want to bring everything together. We need to work with our distribution partners in order to do that, and I think you'll see that come to life, where we do come together and align on objectives. You'll see a lot of HBO Now apps turning into HBO Max apps overnight. As far as the folks that we're not aligned with, our hope and expectation is that we'll continue working with them and in the days and weeks to come, we'll come to an agreement. But the consumer has other options.
Tony Goncalves oversees HBO Max and is also CEO of Otter Media
In the sprint to launch, you had teams collaborating remotely across Los Angeles, Seattle, New York and Atlanta. How were they able to work together and meet the launch date target?
Goncalves: I wish you could see the big smile on my face right now. This could've turned out bad. We were uncomfortable two and a half months ago, until we saw these folks rally. We became proficient in Slack and in video calls. The tech teams in particular became proficient at coding at home, doing quality checks of the apps from home and doing quality control left and right — we had to put devices in people's homes and be really flexible. Then you look at the marketing team that had a marketing plan ready to go, anchored on things like March Madness, and all of a sudden those went away. But you saw a team showing up with a sense of purpose and working remotely and getting comfortable with needing to change the way they were operating and I think we're the better for it. I'm really, really proud of what we've done here and I think this pivot is something that I'm most proud of.
Speaking of pivoting, you've been involved in a lot of big, future-oriented business decisions. What have you learned about navigating a business transformation on a scale like this?
Goncalves: Business transformation at scale, in any business, is really, really tough. I think the only way that businesses succeed is if they have a clear definition of a goal – the beacon – and then a path to get there. It became really clear (for AT&T) that as a core connectivity company, being purely a pipe wasn't the path that the company needed to go. The question then became what value-add was needed to put on top of that. Video happens to be the most trafficked content over the network, so I think the clarity of the fact that the network and content needed to come together has really helped this company put a beacon out there as to what it ultimately needs to be. The hardest part is bringing the hundreds and thousands of employees along for the ride and getting them committed, and I think we've done that by articulating this marriage of content and connectivity.
You've been either in L.A. or traveling to L.A. for much of your career. How have you seen it evolve over the years as a business and tech hub?
Goncalves: If you just look at Playa Vista, and what it was and what it is, that alone gives you the answer, when you have a variety of more tech-oriented companies anchoring in and around Playa and Culver. I think it's fascinating, because the primary reason that that happens is talent acquisition. All these companies need talent, so these hubs tend to emerge out of the need for talent and that's what I've seen pop in L.A. A funny anecdote: I was doing a lot of traveling back and forth earlier in my career at DirecTV and I was looking to potentially buy a condo or house. I looked in Playa and I scratched my head as to why anybody would pay $500k for a place there. But today if you can find one apartment even for sale at anything under three-times that, you'd be lucky.
- hbo-max - dot.LA ›
- The End of Hollywood As We Know It? - dot.LA ›
- John Stankey Takes Control of AT&T Ahead of HBO Max Launch ... ›
- Warner Bros.’ Films Will Be Released in Theaters, HBO Max - dot.LA ›
Subscribe to our newsletter to catch every headline.
Though Silicon Valley is still very much the capital of venture capital, Los Angeles is home to plenty of VCs who have made their mark – investing in successful startups early and reaping colossal returns for their limited partners.
Who stands out? We thought there may be no better judge than their peers, so we asked 28 of L.A.'s top VCs who impresses them the most.
Mark Mullen, Bonfire Ventures<p>Mark Mullen is a founding partner of Bonfire Ventures. He is also founder and the largest investor in Mull Capital and Double M Partners, LP I and II. A common theme in these funds is a focus on business-to-business media and communications infrastructures.</p><p>In the past, Mullen has served as the chief operating officer at the city of Los Angeles' Economic Office and a senior advisor to former Mayor Villaraigosa, overseeing several of the city's assets including Los Angeles International Airport and the Los Angeles Convention Center. Prior to that, he was a partner at Daniels & Associates, a senior banker when the firm sold to RBC Capital Markets in 2007.</p>
Dana Settle, Greycroft<p>Dana Settle is a founding partner of Greycroft, heading the West Coast office in Los Angeles. She currently manages the firm's stakes in Anine Bing, AppAnnie, Bird, Clique, Comparably, Goop, Happiest Baby, Seed, Thrive Market, Versed and WideOrbit, and is known for backing female-founded companies.</p><p>"The real change takes place when female founders build bigger, independent companies, like Stitchfix, TheRealReal," she said this time last year in <a href="https://www.businessinsider.com/greycrofts-dana-settle-on-closing-funding-gap-for-female-founders-2019-12" target="_blank" rel="noopener noreferrer">an interview with Business Insider</a>. "They're creating more wealth across their cap tables and the cap tables tend to be more diverse, so that gives more people opportunity to become an angel investor." Prior to founding Greycroft, she was a venture capitalist and startup advisor in the Bay Area.</p>
Erik Rannala, Mucker Capital<p>Erik Rannala is a founding partner at Mucker Capital, which he created with William Hsu in 2011. Before founding Mucker, Rannala was vice president of global product strategy and development at TripAdvisor and a group manager at eBay, overseeing its premium features business.</p><p>"As an investor, I root for startups. It pains me to see great teams and ideas collapse under the pressure that sometimes follows fundraising. If you've raised money and you're not sure what comes next, that's fine – I don't always know either," Rannala wrote in <a href="https://www.mucker.com/more-funding-wont-magically-fix-your-startup/" target="_blank" rel="noopener noreferrer">a blog post for Mucker</a>. </p><p>Mucker has a portfolio of 61 companies, including Los Angeles-based Honey and Santa Monica-based HMBradley.</p>
William Hsu, Mucker Capital<p>William Hsu is a founding partner at the Santa Monica-based fund Mucker Capital. He started his career as a founder, creating BuildPoint, a provider of workflow management solutions for the commercial construction industry not long after graduating from Stanford. </p> <p><a href="https://www.fastcompany.com/3048173/the-unexpected-and-hard-earned-lessons-from-a-dot-com-flame-out" target="_blank" rel="noopener noreferrer">In an interview with Fast Company</a>, he shared what he learned in the years following, as he led product teams at eBay, Green Dot and Spot Runner, eventually becoming the SVP and Chief Product Officer of At&T Interactive: "Building a company is about hiring correctly, adhering to a timeline, and rigorously valuing opportunity. It's turning something from inspiration and creative movement into process and rigor."</p> <p>These are the values he looks for in founders in addition to creativity. "I like to see the possibility of each and every idea, and being imaginative makes me a passionate investor."</p>
Jim Andelman, Bonfire Ventures<p>Jim Andelman is a founding partner of Bonfire Ventures, a fund that focuses on seed rounds for business software founders. Andelman has been in venture capital for 20 years, previously founding Rincon Venture Partners and leading software investing at Broadview Capital Partners.<br><br>He's no stranger to enterprise software — he also was a member of the Technology Investment Banking Group at Alex. Brown & Sons and worked at Symmetrix, a consulting firm focusing on technology application for businesses.</p> <p><a href="https://dot.la/la-venture-podcast-jim-andelman-of-bonfire-ventures-2648143780.html" target="_self">In a podcast with LA Venture's Minnie Ingersoll</a> earlier this year, he spoke on the hesitations people have about choosing to start a company.</p>"It's two very different things: Should I coach someone to be a VC or should I coach someone to enter the startup ecosystem? On the latter question, my answer is 'hell yeah!'"
Josh Diamond, Walkabout Ventures<p>Josh Diamond founded Walkabout Ventures, a seed fund that primarily focuses on financial service startups. The firm raised a $10 million fund in 2019 and is preparing for its second fund. Among its 19 portfolio companies is HMBradley, which Diamond helped seed and recently <a href="https://dot.la/hm-bradley-2649022900.html" target="_self">raised $18 in a Series A</a> round.</p><p>"The whole reason I started this is that I saw there was a gap in the funding for early stage, financial service startups," he said. As consumers demand more digital access and transparency, he said the market for financial services is transforming — and Los Angeles is quickly becoming a hub for fintech companies. Before founding Walkabout, he was a principal for Clocktower Technology Ventures, another Los Angeles-based fund with a similar focus.</p>
Kara Nortman, Upfront Ventures<p>Kara Nortman was recently promoted to managing partner at Upfront Ventures, making her one of the few women – along with Settle – to ascend to the highest ranks of a major VC firm.</p><p>Though<a href="https://upfront.com/thoughts/announcing-upfronts-new-co-managing-partner" target="_blank" rel="noopener noreferrer"> Upfront had attempted to recruit her</a> before she joined in 2014, she had declined in order to start her own company, Moonfrye, a children's ecommerce company that rebranded to P.S. XO and merged with Seedling. Upfront invested in the combination, and shortly after, Nortman joined the Upfront team.</p><p>Before founding Moonfrye, she was the SVP and General Manager of Urbanspoon and Citysearch at IAC after co-heading IAC's M&A group.</p><p><a href="https://dot.la/moving-from-the-passenger-seat-to-the-drivers-seat-upfronts-kara-nortman-named-managing-partner-2648493740.html" target="_self">In an interview with dot.LA earlier this year</a>, she spoke on how a focus for her as a VC is to continue to open doors for founders and funders of diverse backgrounds.<br></p><p>"Once you're a woman or a person of color in a VC firm, it is making sure other talented people like you get hired, but also hiring people who are not totally like you. You have to make room for different kinds of people. And how do you empower those people?"<br></p>
Brett Brewer, Crosscut Ventures<p>Brett Brewer is a co-founder and managing director of Crosscut Ventures. He has a long history in entrepreneurship, starting a "pencil selling business in 4th grade." In 1998, he co-founded Intermix Media. Under their umbrella were online businesses like Myspace.com and Skilljam.com. After selling Intermix in 2005, he became president of Adknowledge.com.</p><p>Brewer founded Santa Monica-based Crosscut in 2008 alongside Rick Smith and Brian Garrett. His advice to founders <a href="https://crosscut.vc/team/" target="_blank">on Crosscut's website</a> reflects his experience: "Founders have to be prepared to pivot, restart, expect the unexpected, and make tough choices quickly... all in the same week! It's not for the faint of heart, but after doing this for 20 years, you can spot the fire (and desire) from a mile away (or not)."</p>
Eva Ho, Fika Ventures<p>Eva Ho is a founding partner of Fika Ventures, a boutique seed fund, which focuses on data and artificial intelligence-enabled technologies. Prior to founding Fika, she was a founding partner at San Francisco-based Susa Ventures, another seed-stage fund with a similar focus. She is also a serial entrepreneur, most recently co-founding an L.A. location data provider, Factual. She also co-founded Navigating Cancer, a health startup, and is a founding member of All Raise, a nonprofit that supports and provides resources to female founders and funders.</p><p><a href="https://medium.com/@John_Livesay/when-google-bought-my-startup-81f1ee21488c" target="_blank" rel="noopener noreferrer">In an interview with John Livesay</a> shortly before founding Fika, Ho spoke to how her experience at Factual helped focus what she looks for in founders. "I always look for the why. A lot of people have the skills and the confidence and the experience, but they can't convince me that they're truly passionate about this. That's the hard part — you can't fake passion."</p>
Brian Lee, BAM Ventures<p>Brian Lee is a co-founder and managing director of BAM Ventures, an early-stage consumer-focused fund. <a href="https://dot.la/brian-lee-los-angeles-venture-capital-2645125301.html" target="_self">In an interview with dot.LA earlier this year</a>, Lee shared that he ended up being the first investor in Honey, which was bought by PayPal for $4 billion, through investing in founders and understanding their "vibe."</p> <p>"There's certain criteria that we look for in founders, a proprietary kind of checklist that we go through to determine whether or not these are the founders that we want to back…. [Honey's founders] knew exactly what they were building, and how they were going to get there."</p> <p>His eye for the right vibe in a founder is one gleaned from experience. Lee is a serial entrepreneur, founding LegalZoom.com, ShoeDazzle.com and The Honest Company.</p>
Alex Rubalcava, Stage Venture Partners<p>Alex Rubalcava is a founding partner of Stage Venture Partners, a seed venture capital firm that invests in emerging software technology for B2B markets. Prior to joining, he was an analyst at Santa Monica-based Anthem Venture Partners, an investor in early stage technology companies. It was his first job after graduating from Harvard, and during his time at Anthem the fund was part of Series A in companies like MySpace, TrueCar and Android.</p><p>He has served as a board member in several Los Angeles nonprofits and organizations like KIPP LA Schools and South Central Scholars.</p> <p>"Warren Buffett says that he's a better businessman because he's an investor, and he's a better investor because he's a businessman. I feel the same way about VC and value investing. Being good at value investing can make you good at venture capital, and vice versa," Rubalcava said in <a href="https://moiglobal.com/alex-rubalcava-interview/" target="_blank" rel="noopener noreferrer">an interview with Shai Dardashti of MOI Global</a>.</p>
Mark Suster, Upfront Ventures<p>Mark Suster, managing partner at Upfront Ventures, is arguably L.A.'s most visible VC, frequently posting on Twitter and on his <a href="https://bothsidesofthetable.com/" target="_blank" rel="noopener noreferrer">blog</a>, not only about investing but also more personal topics like weight loss. In more normal years, he presides over LA's biggest gathering of tech titans, the Upfront Summit. Before Upfront, he was the founder and chief executive officer of two software companies, BuildOnline and Koral, which was acquired by Salesforce. Upfront backed both of his companies, and eventually he joined their team in 2007.</p><p>In a piece for his blog, "Both Sides of the Table," <a href="https://bothsidesofthetable.com/finding-an-investor-who-is-in-love-with-you-d0badf1a3998" target="_blank" rel="noopener noreferrer">Suster wrote about the importance of passion</a> — not just for entrepreneurs and their businesses, but for the VCs that fund them as well.<br></p><p>"On reflection of the role that I want to play as a VC it is clearly in the camp of passion. I really want to start my journeys only with people with whom I want to work closely with for the next 5–7 years or more. I only want to work on projects in which I believe can produce truly amazing change in an industry or in the world."</p>
- Here Are Los Angeles' Top Venture Capitalists - dot.LA ›
- Ten Venture Capital Firms Commit to 'Diversity' Rider' - dot.LA ›
- Navigating the Venture Capital World as a Black Person - dot.LA ›
- The Largest Venture Capital Raises in Los Angeles in 2020 - dot.LA ›
- Los Angeles Venture Funds Grow, but Spend Less in LA - dot.LA ›
On today's episode of Office Hours, hear from GOAT co-founder and CEO Eddy Lu about big, public — and most importantly, resolved — founder fights, insight on when to know it's time to pivot or quit, how GOAT differentiates itself from other sneaker ecommerce sites — and one of GOAT's early and clever growth hacks that convinced consumers the company had more merch than they actually did.
- GOAT's $100M Raise Fuels its Trendsetter Ambitions - dot.LA ›
- Office Hours Podcast: Bill Gurley On Startups, Venture Capital and ... ›
- Mattel CEO Ynon Kreiz on the Power of Brands and Barbie - dot.LA ›
- Daina Trout, Health-Ade Kombucha CEO, on How to Pivot - dot.LA ›