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State of the Screens

Will AT&T See Max Revenue From Ad-supported HBO?

By September 24, 2020November 15th, 2021No Comments

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

Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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