Inside HBO Max, WarnerMedia’s multibillion-dollar bet on its streaming future

May 27, 2020, 1:00 PM UTC

Beginning Wednesday, when some HBO Now users try to open the streaming app on their devices, they will no longer see the platform’s standard black-and-white icon. The familiar HBO logo will be there, but glowing against a distinct purple backdrop—now reading “HBO Max.

The app update is expected to cause confusion among some of HBO Now’s roughly 8 million subscribers—at least that’s what a handful of published explainers, including from HBO itself, seem to predict, posing the question: “What’s the difference between HBO Go, HBO Now, and HBO Max?” (In brief: Go is a streaming service that comes with a conventional HBO television subscription; Now is a stand-alone online service featuring HBO content; Max is a stand-alone online service featuring WarnerMedia content—including HBO.)

A lot is riding on HBO Max. No mere update to HBO’s existing offerings, HBO Max is an entirely new streaming service that also functions as WarnerMedia’s (and parent company AT&T’s) counterattack in the streaming wars. HBO Max comes armed with 10,000 hours of content, including 1,300 feature films, hailing from a wide-ranging collection of the media conglomerate’s properties and licenses. Included in its library: the Harry Potter franchise, Friends, Batman, Rick and Morty, Anthony Bourdain’s Parts Unknown, The Big Bang Theory, Sesame Street, and The Bachelor, to name a few. HBO’s full catalog will be available on HBO Max in addition to originals streaming exclusively on the platform; the Anna Kendrick–starring romantic comedy series Love Life headlines the service’s launch.

Such a substantial collection was made possible by AT&T’s nearly two-year long acquisition of Time Warner, dragged on by an antitrust challenge from the U.S. Justice Department. The $85.4 billion deal, finally completed in mid-2018, saw AT&T gain control of major Hollywood studio Warner Bros., DC Entertainment, TBS, TNT, CNN, Cartoon Network, HBO, Cinemax, and half of The CW (split evenly with ViacomCBS). The new entertainment company, rebranded under AT&T as WarnerMedia, set out to tear down departmental barriers under the direction of then–WarnerMedia CEO John Stankey (who will succeed Randall Stephenson as chief executive of AT&T in July). With AT&T’s linear TV business in decline, Stankey pushed the prestigious, adult-oriented HBO to broaden its audience and produce more content.

Combined with the rest of WarnerMedia’s legacy properties, HBO Max is an effort to transition AT&T into the streaming age while competing with the likes of Netflix, Disney, Amazon, and Comcast’s NBCUniversal. AT&T plans to direct its existing base of phone, broadband, and pay-TV customers to the service to close the gap. The company is prepared to invest $4 billion over the next three years, a mix of original production costs and lost revenues from content that could’ve been licensed elsewhere.

HBO Max is one of the last major streaming services to enter the market, and it does so in the midst of the novel coronavirus pandemic. The resulting halt in film and television production led to the delay of a highly anticipated Friends reunion special, which was slated to accompany the platform’s launch. HBO Max is also priced at $14.99 a month, the most expensive of the existing streaming services—surpassing Netflix’s starting price of $11.99 and Disney+’s $6.99 price tag—at a time when Americans are grappling with mounting job losses and pinched pockets amid a global economic downturn.

There has been a silver lining to the pandemic for streaming services, however. As Americans stayed at home abiding lockdown and social distancing measures, consumers increasingly turned to the TV and movie platforms to stay entertained. A Fortune-SurveyMonkey poll in October found that 29% of U.S. adults watched streaming services daily; another Fortune-SurveyMonkey poll taken on May 11 saw that figure leap to 45%. In April, Netflix disclosed that it had added nearly 16 million subscribers in the first quarter of this year—more than double the estimate of Wall Street analysts—reflecting the pandemic’s impact on streaming growth.

Others, however, have been less fortunate. In an interview earlier this month, Quibi founder and chairman Jeffrey Katzenberg pegged the mobile streaming app’s slow start on launching during the pandemic. “I attribute everything that has gone wrong to coronavirus. Everything,” he told the New York Times.

With HBO Max, WarnerMedia executives will be watching closely to see if the pandemic’s boost to streaming services outweighs the overall negative effects of a sluggish economy. “There certainly is a plus in terms of the receptivity and people’s interest and desire for these kinds of services,” said Andy Forssell, WarnerMedia’s executive vice president of direct-to-consumer and general manager of HBO Max. “We’re seeing people who always wanted to watch The Sopranos, and now it’s time.”

Besides the Friends reunion, the pandemic hasn’t had a significant impact on HBO Max’s original releases, Forssell said. The production schedule for 2021 remains an open question, but until then the service will be supplemented with releases later this summer, including its first original film, An American Pickle, starring Seth Rogen. The platform will also premiere a second season of DC Comics web series Doom Patrol, a third season of the TBS cult comedy Search Party, and a docuseries on comedian and actress Amy Schumer. HBO Max is also leaning into kids-oriented content, including a new Looney Tunes Cartoons series from Warner Bros. Animation and Sesame Workshop’s The Not Too Late Show hosted by Elmo.

The effects of the pandemic were felt in other ways. Stay-at-home measures issued in March forced HBO Max’s technology team to finish building the infrastructure for the platform from remote locations. A flood in a facility in Seattle where HBO Max was being tested led to a power outage that further complicated the situation. “It was one of those things where you’re like, ‘You got to be kidding me,’” said Jeremy Legg, WarnerMedia’s chief technology officer.

WarnerMedia executives briefly debated delaying HBO Max’s May 27 launch as engineers and coders scrambled to finish testing the platform, Legg said. Ultimately, the decision was made to proceed as it became clear that remote work would not have a significant impact on productivity ahead of the service’s launch.

HBO Max runs on the same underlying tech platform as HBO Go and HBO Now. The services’ ability to handle high-volume traffic during episodes of Game of Thrones’ final season was a convincing factor in the decision to build upon existing technology rather than design from scratch, Legg said. User interface design features include movie and TV titles represented as various shapes to “create a kind of taxonomy,” said Sarah Lyons, senior vice president of product experience for WarnerMedia’s direct-to-consumer division. Squares represent titles consumers are in the midst of watching or have flagged for later; landscape rectangles indicate individual episodes of a TV series; circles represent content curated by HBO Max’s human editorial team.

One of the biggest challenges of HBO Max’s platform will be to appeal to traditional mature-minded HBO subscribers along with younger and more family-oriented audiences—a conflict of interest that drew criticism internally as well as concern from outside observers. “The conundrum we tried to tackle was, how do you double the catalog of adult content for all these additional brands that target different types of users like Gen Z and millennials’ families?” Lyons said. Individual profiles and parent control search features have been added to help various age groups filter through specific content, she added.

As of press time, HBO Max arrives without streaming compatibility on Roku, Amazon Fire TV, Comcast, and Dish TV. The company expects to push them through. “We still do have discussions going on, and as a very smart business-affairs person internally here said last fall, these deals get done when they have to get done,” Forssell said.

As for the trio offering of HBO Go, HBO Now, and HBO Max, Forssell did not rule out the eventual elimination of Go in the future “at some point in concert with our distribution partners.”

“Consumers should absolutely demand simplicity from us,” he said. “They should absolutely hold us accountable to be as simple as possible.”

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