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AT&T Chief John Stankey Defends HBO Max Movie Release Strategy: ‘We Knew We Needed to Try Something Different’

AT&T CEO John Stankey
Evan Agostini/Invision/AP

AT&T CEO John Stankey asserted that the release of Warner Bros.’s full 2021 movie slate on HBO Max and in theaters at the same time will be a “win-win-win” — for WarnerMedia, consumers and partners.

Stankey acknowledged the backlash AT&T and WarnerMedia have faced from theater owners and others, including vitriol from filmmaker Christopher Nolan. “I know there’s a lot of noise out in the market, people with different viewpoints,” Stankey said, speaking Tuesday at the UBS Global TMT Virtual Conference. He added, “Anytime you’re going to change a model, it’s going to create a degree of noise.”

But the AT&T chief said that in light of the ongoing COVID pandemic and the unwillingness of consumers to flock back to theaters anytime soon, WarnerMedia needed a different approach to best monetize the movie slate.

“We knew we needed to try something different,” Stankey said. And, he said, “We think it’s a great way to penetrate the market faster” with HBO Max. Regarding the WB slate, “This is one of the arrows in the quiver for us to do that.”

Stankey said HBO Max has gained 4 million subscriber activations in the past two months, to stand at nearly 12.6 million (up from 8.6 million at the end of Q3). In the last 30 days, he said, the number of hours HBO Max customers spent streaming the service weekly increased about 36%.

“I’m really pleased with where we are with HBO Max,” he said.

Last week WarnerMedia stunned Hollywood by announcing that Warner Bros.’ current 17-movie slate for 2021 will hit HBO Max day-and-date with theaters. That came after the WB’s “Wonder Woman 1984” was already set to hit HBO Max and theaters simultaneously on Dec. 25.

“The question was, what’s best to deal with that asset? Our feeling is, there’s a win-win-win here,” Stankey said. “In our case we had a fair amount of content in the pipeline” and because of the pandemic the studio was facing “an inability to take that product out to consumers.”

What WarnerMedia did not want to do was license Warner Bros.’ movies to competing streaming platforms. “From our perspective, going and giving those to significant competitors is probably not the most intelligent way to deal with that,” said Stankey.

Stankey added that Warner Bros. believed it was important to get its movies into the market “in a staged way,” versus “snowplowing content” into the back half of 2021 when movie theaters are expected to more widely open back up. “Smoothing that out is frankly in the best interests of not only us but those who create the product.” he said.

“It’s to give customers choice,” Stankey said. “It’s to allow the industry to have this transitional moment.” With the day-and-date release strategy, WarnerMedia “still show[s] our respect for theatrical venues, and don’t push it exclusively to streaming — or hand it off to our competitors.”

As for what happens in 2022 and beyond, “The longer-term is dictated by what consumers wish to do,” Stankey said. “Customers are going to drive what occurs in the market ultimately.”

Asked about WarnerMedia’s plans to launch an ad-supported, cheaper version of HBO Max next year, Stankey said that’s still on track for 2021. Some of the content in the AVOD iteration of the service will have ads, he said, but other content will not have ads: “There’s no reason we can’t offer a service to a customer that has that delineation.” Stankey said the initial launch of the ad-supported HBO Max will not “be heavy” with live news or sports.

AT&T has reportedly been looking to offload the declining DirecTV division. Stankey didn’t speak to that, but he admitted that the pay-TV business is not as attractive as it once was. “If you’re just using your platform to distribute somebody else’s IP [intellectual property] it’s going to be difficult to make money,” he said. “Because that aggregated pay-TV content is available on so many platforms, what’s happening is that margin at retail is being competed away.” Stankey said the telco will continue to use DirecTV and the over-the-top AT&T TV product “strategically” to meet customer expectations and enhance the value of multiproduct bundles.