HBO Max will reportedly get a cheaper, ad-supported tier in 2021

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Advertising and HBO aren’t usually thought of in the same sentence, but a new report suggests that AT&T’s upcoming streaming service, HBO Max, will become the first major HBO-branded project to incorporate commercials.

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AT&T is exploring an ad-supported tier for HBO Max that would launch in 2021, according toReuters. That’s one year after HBO Max is expected to launch as an ad-free subscription service.Reuterssuggests that HBO Max is likely to cost more than HBO’s current standalone streaming service, HBO Now ($15 a month), which is on par with earlier reports. However,FierceVideorecently reported that analysts believe HBO Max could cost as low as $8 a month through an ad-supported offering.

The ad-supported option will allow AT&T to offer HBO Max at a lower cost than that of the traditional cable channel and HBO Now. HBO Max will offer more content than HBO Now, and is targeted at cord-cutters. The company will also offer HBO Max for free to the approximately 10 million AT&T customers who are also HBO subscribers. HBO reportedly had approximately 140 million subscribers globally as of 2018, with 35 million subscribers in the United States alone.The Vergehas reached out to HBO for additional comment.

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This doesn’t mean those 10 million subscribers, or other customers that use HBO via cable packages and HBO Now, will start seeing ads. An HBO spokesperson previously toldBloombergthat “We will never carry ads on HBO.”

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But HBO Max isstillHBO to an extent. This is the issue with AT&T and WarnerMedia’s decision to lean on the HBO brand name for its general service; people still see it as HBO. Jon Klein, former president of CNN and media expert, previously toldThe Vergethat by adding HBO into the name, people are expecting a traditional HBO experience. Adding Max implies it’s that experience, but more, Klein said. Advertisements haven’t been part of the HBO experience — at least until now.

AT&T CEO Randall Stephenson referred to Netflix as a Walmart-of-sorts at an investor conference in 2018, and referred to expansion beyond traditional HBO programming as “thoughtfully curated” and “premium,” according toReuters. It’s the same type of descriptor that HBO uses for its prestigious offerings. Stephenson also reportedly bristled at terms like “general interest.” Still, instituting ads, expanding into children and teen content, live news programming, and bringing in shows like a reboot ofGossip Girlthat would feel more at home on The CW (a WarnerMedia network) doesn’t sound like HBO. At least, not current HBO.

The HBO brand may be shifting in order to compete through scale alone. The entertainment landscape is undergoing one of its most transformative periods in history. HBO Now isn’t a competitor to Netflix or Disney+, but AT&T and WarnerMedia want HBO Max to stand alongside the bigger streaming giants. AT&T is aiming to have 80 million global subscribers by 2025, according toReuters, including 30 million internationally. Disney is looking to add close to 100 million subscribers by 2024, with some analysts predicting that Disney+ could hit 18 million global subscribers by the end of 2020 alone.

Incorporating advertisements into HBO Max in order to offer a cheaper price tier gives AT&T and WarnerMedia a way to scale up their general streaming service — and fast. Scaling quickly is important to these companies, even if that strategy comes with its own issues.

Another way AT&T is looking to boost HBO Max’s subscriber base is potentially offering it as a bundle for wireless customers. T-Mobile currently offers a basic Netflix plan for wireless customers, and Verizon will give its customer base a free year of Disney+. HBO Max can help AT&T retain wireless subscribers, AT&T executives toldReuters, and in turn those customers who sign up help bolster the streaming service.

HBO Max’s price will officially be announced on October 29th at a special investors day presentation for the service. More information, including an official launch date, is likely to be announced, too.

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