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.
<p>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.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMyNDE0MC9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTU5OTg1NTA2NH0.Vkun6ahQA-FWExb8lRInSten7T9VtuxNYctE25g3zg4/image.png?width=980" id="bf9c0" class="rm-shortcode" data-rm-shortcode-id="7a619d150377d30cb6a0d5d5e81fee21" data-rm-shortcode-name="rebelmouse-image" />
<small class="image-media media-caption" placeholder="Add Photo Caption...">HBO Max launches with over 10,000 titles across a range of content brands</small></p><p>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. </p><p>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.<br/></p><p><strong>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?</strong><br/></p><p><strong>Goncalves:</strong> 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.</p>
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HBO Max users will be able to browse by "hub"
<p><strong>Lyons</strong>: 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.</p><p><strong>Goncalves</strong>: 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.</p><p><strong>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?</strong></p><p><strong>Goncalves: </strong>If there were a formula, I'd be happy to walk you through that. But the reality is we had to </p>
<p>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.</p><p><strong>Lyons</strong>: 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. </p><p><strong>How do you approach the role of original versus licensed content?</strong></p><p><strong>Goncalves</strong>: 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.</p><p><strong>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?</strong></p><p><strong>Goncalves</strong>: 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.</p><p class="shortcode-media shortcode-media-rebelmouse-image">
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<small class="image-media media-caption" placeholder="Add Photo Caption...">Tony Goncalves oversees HBO Max and is also CEO of Otter Media</small></p><p><strong>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?</strong> </p><p><strong>Goncalves</strong>: 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. </p><p><strong>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?</strong></p><p><strong>Goncalves</strong>: 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.</p><p><strong>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?</strong> </p><p><strong>Goncalves</strong>: 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.</p><p><br/></p><p class="shortcode-media shortcode-media-youtube">
<span style="display:block;position:relative;padding-top:56.25%;" class="rm-shortcode" data-rm-shortcode-id="e22e632f9124627881c42e73cc3e02ca"><iframe type="lazy-iframe" data-runner-src="https://www.youtube.com/embed/iS8hHeKS178?rel=0" width="100%" height="auto" frameborder="0" scrolling="no" style="position:absolute;top:0;left:0;width:100%;height:100%;"></iframe></span>
<small class="image-media media-caption" placeholder="Add Photo Caption...">HBO Max vs. HBO Go vs. HBO Now | Explainer Video</small>
<small class="image-media media-photo-credit" placeholder="Add Photo Credit..."><a href="https://www.youtube.com/watch?v=iS8hHeKS178" target="_blank">www.youtube.com</a>
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</p>From Your Site Articles
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Coronavirus Updates: Quibi's Possible Ad Woes; Warner's IPO Hopes; Disney Plans to Open Florida Theme Park
May 26 2020
Here are the latest headlines regarding how the novel coronavirus is impacting the Los Angeles startup and tech communities. Sign up for our newsletter and follow dot.LA on Twitter for the latest updates.
- Quibi may be struggling in advertising amid concerns about COVID-19 expenses
- Disney to propose the opening of Florida's Disney World, could be blueprint for California
- Are IPOs poised to make a comeback? Warner Music Group hopes so
<ul class="ee-ul"></ul>
Quibi may be struggling in advertising amid concerns about COVID-19 expenses
<img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMjkxNDUzNi9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYzNDA2ODI5Nn0.sd3rf3EP2GScxRzXSZjJ0UXp-jg4IsIJWvHAaowj7nk/img.jpg?width=980" id="7566b" class="rm-shortcode" data-rm-shortcode-id="01dacfe58633b337398c9330e23fb085" data-rm-shortcode-name="rebelmouse-image" /><p>Quibi's struggles continue, as several major advertisers are asking to defer or extend their payment, the <a href="https://www.wsj.com/articles/advertisers-seek-to-revise-deal-terms-with-streamer-quibi-11590519825" target="_blank">Wall Street Journal reported</a> Tuesday. The requests come from Pepsi, Taco Bell, Anheuser-Busch and Walmart, and stem from the impact the coronavirus has had on the advertisers' business or concerns that the short-form video service launched in April is struggling to meet its viewer targets.</p><p> Either way, it's more bad news for the startup that previously blazed its way to $1.75 billion in funding before ever acquiring a customer. The ability of Jeffrey Katzenberg and Meg Whitman, Quibi's leaders, to charm content creators and woo advertisers was widely considered the platform's secret sauce leading up to launch. </p><p>The private, Hollywood-based company raised $150 million worth of advertising from 10 companies that were presumably excited by Quibi's attempt to turn consumers' "on-the-go" moments into viewing time. But it's been a bumpy seven weeks. Subscriber numbers have disappointed, a patent infringement lawsuit lingers, and the service's core value proposition has been effectively wiped out by the stay-at-home reality ushered in by the coronavirus. The Journal also reported that Whitman, who has told <a target="_self" href="http://dot.la/">dot.LA</a> that she is committed to playing a long game, has instituted cost-cutting measures, including slowing down hiring.</p>Are IPOs poised to make a comeback? Warner Music Group hopes so
<img lazy-loadable="true" src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMyMjE3OC9vcmlnaW4ucG5nIiwiZXhwaXJlc19hdCI6MTYwNzY5MTI5MH0.9sqmxmdC1HrbYl_EyeiobaESM8qjE-gz46NZELXkakY/image.png?width=980" id="d71ce" class="rm-shortcode" data-rm-shortcode-id="048c4347e6498b47c1ab41c3aeb0759c" data-rm-shortcode-name="rebelmouse-image" /> <p><br></p><p>Warner Music Group announced is moving forward with its IPO, selling 13.7% of the company's common stock at $23 to $26 a share. That would bring the value of the Los Angeles-based company to about $13.3 billion. The company plans to offer 70 million shares at the launch, but no date has been set yet.</p><p>The IPO would be one of the first big L.A. companies to wade into the public markets, and may represent a bit more optimism that the music industry is moving toward a streaming world — a pivot that is already paying off amid the pandemic for companies like Netflix, Amazon, and Hulu. HBO, the cable channeled owned by AT&T, launches its HBO Max service on Wednesday. </p><p>Warner Music represents hundreds of top artists, ranging from Cardi B to David Bowie, and may use the IPO to position itself in a COVID-19 world where artists aren't able to perform in arenas or stadiums. Live Nation, a Beverly Hills-based entertainment company, recently furloughed hundreds of staff as the company was unable to sell tickets to events. </p>Disney to propose opening Florida's Disney World, could be blueprint for California parks
<img lazy-loadable="true" src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMyMjMyNS9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYzMjg5Nzg0M30.qr4qauMTWZccfh0pA758TLPSjPkwxPVwYMkgnJxPJsA/image.jpg?width=980" id="d582d" class="rm-shortcode" data-rm-shortcode-id="1e1e4793a1211b8e09f137ade95a387e" data-rm-shortcode-name="rebelmouse-image" /> <p>The Walt Disney Co. announced that Walt Disney World Resort executives will submit a proposal Wednesday to the Orange County Economic Recovery Task Force in Florida for a phased reopening of the resort's theme parks. Jim MacPhee, Senior Vice President of Operations, will give a virtual presentation of the proposed approach during the task force's online meeting</p><p>The results could pave the way for Disney and other California theme parks closed by COVID-19 may reopen once the state hits the third stage of reopening. The state is currently on stage two, and there is no exact time frame when other non-essential business can open their doors — or turnstiles at Disneyland, Universal Studios Hollywood, Knott's Berry Farm, Six Flags Magic Mountain, SeaWorld San Diego, Legoland California. </p><p>"Theme parks are slated to open in Stage 3 if the rate of spread of COVID-19 and hospitalizations remain stable," according to California Health and Human Services Agency spokesperson Kate Folmar.</p>From Your Site Articles
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One way to think about the entertainment industry is as a massive war for attention. Within that war rumbles the battle for at-home video dominance (often itself called a streaming war, which feels a bit like calling the Pacific theater of World War II the Pacific War).
At that battlefront, giants like Netflix and Disney spend boggling amounts of money and rack up mind-numbing debts. On the periphery, several smaller battalions like Tubi and Vudu wield their ad-funded service weapons. And scattered about it all, minor militias scurry in search of a patch to claim their own.
Orby TV thinks it's found one -- starting at about $40 a month compared to more high-priced competitors.
<p>"We're looking at what we feel is an underserved segment," said Michael Thornton, Orby TV founder and chief executive. Previously chief revenue officer of Starz after stints at Disney and DirecTV, Thornton launched Orby TV in early 2019 out of Studio City for "people that are fed up with high prices and want a lean-back experience" where you "hit power, and then it's on." </p><p>For an installation fee and a monthly payment of less than half of what most cable or satellite services charge, Orby TV customers get dozens of cable channels via satellite dish, plus dozens more over-the-air (OTA) broadcast channels via digital antenna, all beamed through one coaxial cable into a TV that turns on with the click of a remote, complete with a program guide. </p><p class="shortcode-media shortcode-media-rebelmouse-image">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMwNzc4Mi9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYwNDgyMzE0NX0.tbHHvLADSJX00FWyfh41zeoisjg2-LcsE7IsyNM8ZCo/image.jpg?width=980" id="04eec" class="rm-shortcode" data-rm-shortcode-id="bdfe51bbb792b89b2bdd1fbefbc8fbd7" data-rm-shortcode-name="rebelmouse-image" />
<small class="image-media media-caption" placeholder="Add Photo Caption...">Orby TV's program guide integrates its broadcast and satellite channels</small></p><h3>TV for a Toll </h3><p>One reason Orby TV is relatively affordable is that it doesn't carry sports channels. Foregoing national and regional sports networks means saving on licensing costs, which the company can pass on to customers. Sports coverage from broadcast networks (ABC, CBS, NBC, Fox) and Turner stations (TNT, TBS) remains available. </p><p>Orby TV also eschews channels that can only be had as parts of a bundle, many of which are owned and operated by the networks. Those bundles tend to be an all-or-nothing proposition.</p><p>"The industry has been and always will be very paranoid in terms of how it sets itself up," Thornton told dot.LA. "They have most favored nations clauses out the ying-yang (so there's) very little ability to cherry pick services."</p><p>The upshot is that Orby TV viewers can lean back and watch Fox (via broadcast), but not its cable channels like Fox News or Fox Sports; NBC, but not Bravo, MSNBC or Telemundo; ABC, but not ESPN, Disney Channel, or National Geographic. </p><p>Nevertheless, with a stable that still includes TNT, A&E, CNN, AMC and others, Orby TV's basic package includes 46 satellite cable channels, per its website, with upgrades available for an additional charge.</p><p>The digital antenna, meanwhile, picks up not just the major network broadcasts but also the OTA "digital subchannels" that flow alongside these transmissions in the government regulated broadcast spectrum. (Think stations like ABC-2, ABC-3, NBC-7, etc.) Reception quantity varies by location but the company noted that 150 OTA channels are available in Hermosa Beach, and 88 just outside of Denver. These all fit on the broadcast spectrum thanks to decades of digital compression advances, noted an Orby TV representative.</p><p>Throw in the technological infrastructure afforded by the cloud, remote communication tools, and data management systems, and Orby TV's innovation is simply taking advantage of a set of "tried and true" technologies and combining it with a prepaid business model to enable a simple, flexible, low-cost service.</p><p>Customers can cancel their monthly subscription anytime and return at leisure, and meanwhile keep the broadcast channels coming in from the antenna – which remain on the program guide. Add it all up, and media analyst Dan Rayburn calls Orby TV a "niche service that works well for what it does." Affordability and flexibility, notes Thornton, could be "particularly relevant right now given what people are going through" with the coronavirus crisis. </p><h3>Who's it for? </h3><p>Thornton cited the growing pool of the Pay TV-world's net losses–six million in the past year–as a potential source of subscribers, who could be looking for cheaper options.</p>
<img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzMwNzg2NC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTU5NzYwMTQ4N30.bulOxiKZ4o1KVTw5ElPt53dotJCIPh8ym2My7cUxg-A/img.jpg?width=980" id="de719" class="rm-shortcode" data-rm-shortcode-id="d62d7994c1bbd8d7f0ee1e924a8b691f" data-rm-shortcode-name="rebelmouse-image" />
Michael Thornton, CEO of Orby TV and UCLA Anderson Alum
<p>"The downward trend in traditional (cable) that we've seen for the better part of a decade has been accelerating as consumers look for less expensive and more flexible options," noted Ian Olgeirson, senior analyst at SNL Kagan.</p><p>Rayburn sees a smaller addressable market for Orby TV: those who live in rural areas with poor access to broadband. Such technological deprivation often forecloses internet-delivered alternatives like YouTube TV, Hulu TV, or Sling TV</p><p>Leichtman generally concurs. Orby TV, he says, is primarily for "rural, non-sports fans."</p><p>One plus side of that, added Rayburn, is that "it's much easier for them to have lower customer acquisition costs because they can target specific people in a zip code or zone."</p><p>Thornton, though, is more aspirational. He sees an addressable market that includes not just those lacking broadband and Pay TV's net losses, but anyone currently with an OTA-only setup (difficult to precisely quantify) and even the 40 million-plus who "have a prepaid cell phone service and are familiar with the model," he said.</p>
<p>But even modest numbers might be enough.<br/></p><p>"They don't need a lot of subscribers to be profitable," said Rayburn. </p><p>Thornton pegs it at around 80,000. Already claiming "tens of thousands of subscribers and growing," across all 48 states, with Best Buy as its biggest retailer, the plan is to break even by no later than early next year.</p><p>"We're essentially on schedule," he reported. </p><p>Orby TV's lead investor, a pension fund that requests anonymity, will presumably be pleased. </p><p>"We've always told our investor that we're open to exit strategies," Thornton said. "(But) it was always about providing a self-sustaining service."</p><p>"There's value in being a small company that's profitable," said Rayburn. "Everybody is trying to build such a big company. What's wrong with being a small company that grows every year and makes a profit?" </p>Related Articles Around the Web
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