May 19, 2021 - Economy & Business

HBO Max to launch $10 monthly, ad-supported tier starting in June

Photo Illustration by Igor Golovniov/SOPA Images/LightRocket via Getty Images

HBO Max will introduce an ad-supported tier this June for $9.99, its parent company WarnerMedia announced Wednesday at its annual "Upfront" advertising presentation.

Why it matters: More streamers are launching ad-supported options to better compete for consumer dollars.

  • As more services launch, consumers will need to be choosier about their budgets. Ad-supported tiers offer consumers flexibility when figuring out which services they are willing to pay for.
  • Data shows consumers are willing to subscribe to four streaming services on average per month, and they are willing to pay $40 monthly on average.

Details: The new ad-supported tier, set to go live the first week of June, will launch with ad experiences that feel different from ads consumers see on traditional TV. Most traditional TV ads are targeted by age and gender, and purchased based on shows during different time slots, which means they aren't customized.

  • Come June, advertisers will be able to own an entire block of content on HBO Max's ad-supported tier.
  • In the future, they will be able to sponsor a screen that appears when consumers hit pause on a show or movie. Those ads are meant to engage consumers when they take a break. For example, this type of ad space would be great for a snack or toilet paper advertiser.
  • Advertisers will also eventually be able to buy ads while consumers are browsing for shows.
  • At the presentation, the company also announced new programming and teased special events like the highly anticipated "Friends" reunion.

Be smart: HBO Max's ad-supported tier is still significantly more expensive than its competitors. NBCUniversal's Peacock, Discovery+ and ViacomCBS' Paramount+ all offer an ad-supported tier for about $5 monthly. Hulu's ad-supported tier is $6 monthly.

The big picture: The announcement and presentation came just two days after WarnerMedia's parent company, AT&T, announced it would spin off WarnerMedia and merge it with rival streamer and cable giant Discovery.

  • For now, it's unclear how the two companies will combine or bundle their streaming assets.
  • HBO Max CEO Jason Kilar, who was reportedly looped out of deal details, appeared at the public presentation, assuring advertisers that it's "business as usual" at the company, despite changes to come.
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