HBO To Form Backbone Of New WarnerMedia Streaming Service

In short: AT&T has today confirmed plans to launch a new streaming service based off the company’s acquisition of WarnerMedia. At the time, AT&T provided little details on the actual content, or how the service will operate, although more details are now starting to come through thanks to comments made by WarnerMedia's CEO, John Stankey, during the ongoing Vanity Fair's New Establishment Summit (VF Summit) 2018 in Los Angeles. In particular, Stankey confirmed HBO will effectively be used as the streaming service's main pulling power.

Background: HBO, an asset picked up by AT&T through the creation of WarnerMedia following the purchase of Time Warner, is already available as a stand-alone product in the form of HBO Now which costs $14.99 per month in the US. However, the comments made today make it clear HBO will become one of the hallmarks of the new direct-to-consumer WarnerMedia streaming service. A point which would seem to suggest that if the stand-alone version of HBO Now is to continue as it is, the new streaming service will cost in excess of that $14.99 monthly subscription cost. While WarnerMedia is clearly hoping HBO and its relative content will be a primary factor in drawing customers to its new service, it will not be the only source of content with the service now expected to be padded out with content from other “strong brands.”

Impact: The arrival of a WarnerMedia-based streaming service spearheaded by HBO could prove to be a disruptor to the market. HBO already attracts a healthy dose of paid subscribers thanks to its emphasis on producing high quality and highly engaging content. Therefore, while the price has yet to be confirmed, and likely won’t be until closer to launch, if WarnerMedia can manage to offer a more robust streaming solution which remains within reach of the current HBO Now price, it could prove to be a highly sought-after service. Offering customers the option to gain access to a wealth of entertainment shows, movies, and other lifestyle and factual content, all in addition to access to premium HBO content. The service is not expected to launch until the fourth quarter of 2019.

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