Big news: Details are starting to emerge around advertising with HBO Max.
Related: My thoughts on HBO Max’s Impact on Convergent TV Advertising
Key details for HBO Max advertising:
1) Launching in spring 2021
2) 2 minutes/hour for movies
3) 4 minutes/hour for TV shows
4) ≈ $80 CPM
5) $250K quarterly commitment
Big question #1: How does this ad load compare to other offerings?
Ad minutes per hour:
1) Linear TV – 16 – 20
2) Hulu – 9
3) Digital video – 8
4) Peacock – 5
5) HBO Max – 2-4
Big question #2: Why does HBO Max want ads?
Quick answer: Advertising will increase the average revenue per user (ARPU) beyond the $15/month subscription.
Quick math on the advertising model for HBO Max:
1) Ad minutes/hour – 3
2) 30s spots/hour – 6
3) CPM $ – ≈ $80
4) $/spot – $0.08
5) Ad revenue/hour – $0.48
HBO Max domestic subscribers (% growth) according to AT&T:
1) 2019-Q4 – 34.6M
2) 2020-Q2 – 36.3M (↑ 5%)
HBO Max domestic subscriber projections (YoY growth):
1) 2019 – 34M
2) 2020P – 36M (↑ 6%)
3) 2021P – 38M (↑ 6%)
4) 2022P – 41M (↑ 8%)
5) 2023P – 44M (↑ 7%)
6) 2024P – 47M (↑ 7%)
7) 2025P – 50M (↑ 6%)
Fun: Are you an HBO Max subscriber?
More #1: WarnerMedia’s New CEO Says HBO Max Has One Clear Edge Over Netflix
More #2: Burn the mills: Why WarnerMedia is willing to chuck deuces to Roku and Amazon
