With HBO Max, WarnerMedia bets that consumers will pay more for streaming

WarnerMedia unveiled its long-awaited HBO Max, which will cost consumers $14.99 a month when it launches in May, making it the most expensive gladiator in the streaming wars.

The stakes are high for WarnerMedia, whose service will compete in an increasingly crowded market. For nearly two decades, HBO has set the gold standard in television with such shows as “Succession,” “Game of Thrones” and “The Sopranos.” But the world is changing as tech companies draw eyeballs and talent away from legacy TV channels.

Nearly two years in the making, the new service was showcased by WarnerMedia and its parent AT&T for more than 200 analysts and investors Tuesday at the historic Warner Bros. lot in Burbank. HBO Max is being designed to go head to head with Netflix, Amazon Prime Video, Hulu and Disney+, which rolls out next month. The new service will be available to AT&T customers that subscribe to HBO at no additional cost.

WarnerMedia had several considerations in setting the price. Pay-TV operators typically sell HBO to its customers for about $15 a month, and WarnerMedia didn’t want to undercut its longtime partners, or lose money on the service. But because it will cost substantially more a month than rivals including Disney ($6.99), Apple ($4.99) and Netflix ($8.99 to $12.99), WarnerMedia executives must convince consumers that HBO Max is worth the additional cost.

To that end, they said the service will launch with a plethora of new and old content — totaling 10,000 hours — in hopes of drawing tens of millions of subscribers. WarnerMedia said it expects HBO Max will have 50 million domestic customers by 2025.

“We are committed to building a scaled and profitable platform that provides a solid foundation for future growth,” WarnerMedia Chief Executive John Stankey said during the presentation.

HBO Max will feature a wide array of content, with 31 original programs in 2020 targeting every audience demographic, including kids and family, millennials and women. Much of HBO and sister network TBS’ shows draw more men, so WarnerMedia is making a concerted effort to appeal to women.

“This is an area of emphasis for us because it is an underserved audience,” Sarah Aubrey, head of original content for HBO Max, said of the focus on women.

Programming will be drawn from WarnerMedia’s vast empire of brands, including CNN, Cartoon Network and the Warner Bros. and MGM library of classic films such as “Citizen Kane” and “Singing in the Rain.”

HBO Max also will be the new streaming home of “Friends,” “The Big Bang Theory” and “South Park.” The service has additionally acquired the U.S. streaming rights to the cult Adult Swim series “Rick & Morty.”

For kids and families, WarnerMedia is making a new series of “Looney Tunes” cartoons. “Jellystone,” a new animated kids series, will feature Hanna-Barbera favorites including Yogi Bear and Boo-Boo, while Robert Zemeckis (“Who Framed Roger Rabbit?”) is the executive producer of an animated and live-action hybrid show called “Tooned Out.” The classic cartoon catalog will include “Flintstones,” “The Jetsons” and “Scooby-Doo.”

Longtime Warner Bros. producer Greg Berlanti is shepherding a DC anthology series called “Strange Adventures” for the service, as well as a show inspired by the “Green Lantern” comics. Other HBO Max projects include “DC Super Hero High” from executive producer Elizabeth Banks, a series about a female rap group from Issa Rae of “Insecure” and stand-up comedy specials with talent picked by Conan O’Brien.

WarnerMedia’s parent, AT&T Inc., is making a huge bet on the streaming service to transform the phone company into a 21st century entertainment colossus. It needs to justify its $85-billion purchase of WarnerMedia, previously known as Time Warner Inc.

For Stankey, the success of HBO Max is crucial to his chances of eventually succeeding his boss, Randall Stephenson, as chief executive of AT&T. Stankey’s track record has been mixed. He spearheaded AT&T’s purchase of WarnerMedia and has run the company since June 2018.

He also was the architect of AT&T’s purchase of DirecTV, which has bled more than 4 million customers since AT&T purchased the El Segundo satellite TV giant four years ago. In addition, the AT&T TV Now streaming product, a bundle of traditional channels that Stankey helped create, has been received poorly by consumers.

Stephenson told investors that AT&T was prepared to spend big — $2 billion in 2020 — to make HBO Max a success.

“There aren’t many companies that can make that kind of commitment, and that kind of investment,” Stephenson said.

Analysts have been eagerly awaiting details for HBO Max, given the competition. The Disney+ streaming service will launch Nov. 12, powered by brands including Marvel, “Star Wars” and Pixar. Apple Inc. is set to launch Apple TV+ on Friday with shows from Jennifer Aniston, Reese Witherspoon and Hailee Steinfeld.

Some in Hollywood openly question whether HBO Max will succeed. Culture clashes during the first year of AT&T ownership culminated in late February with sweeping management changes.

The longtime chairman of HBO, Richard Plepler, and president of Turner, David Levy, departed. Stankey quickly brought in Bob Greenblatt, former NBC chief, in the newly created role of chairman of WarnerMedia Entertainment. Now Greenblatt is in charge of HBO, Turner channels and the new streaming service.