AT&T’s WarnerMedia plans to charge $9.99 per month for its advertising-supported HBO Max service, set to launch in June, according to people familiar with the matter.
The ad-free version of HBO Max, which debuted nearly a year ago, costs $14.99 per month. That’s the same price HBO charges pay-TV subscribers who add the premium channel to their bundle.
AT&T said last week HBO and HBO Max have a combined 44.2 million U.S. subscribers. AT&T has completely restructured WarnerMedia to better compete against Netflix and other streaming services. An advertising-supported service at $9.99 will allow HBO Max to stand out as significantly cheaper than Netflix, whose standard price is $13.99 per month. AT&T expects HBO Max and HBO to have between 120 million and 150 million subscribers by the end of 2025.
AT&T Chief Executive John Stankey told CNBC last week that HBO and HBO Max’s average revenue per user of $11.72 in the U.S. has been “really impressive.” He also noted the ad-supported HBO Max will expand the product’s potential audience to more cost-conscious consumers.
“Whether a customer chooses to buy the ad-supported product or buy the straight subscription product, it’s accretive in the same ways to our business,” Stankey said. Giving consumers the choice to choose which version of HBO Max they prefer “is a strength” and “by no means an admission of something didn’t work out the right way. It’s always been the plan,” he added.
WarnerMedia plans to only attach advertisements to programming that’s exclusively available on HBO Max and won’t muddy HBO shows with commercials, WarnerMedia CEO Jason Kilar has said. Early last year, WarnerMedia had preliminarily considered selling an advertising-supported product of just HBO Max content for $4.99 per month, but nixed that idea for a combined product with HBO, two of the people said, who asked not to be named because the discussions were private.
