WarnerMedia CEO Highlights Learnings From Same-Day Releases, Ad-Supported HBO Max, and Streaming Sports
WarnerMedia CEO Jason Kilar might be one of the most hated men in Hollywood, but he’s beloved almost everywhere else. That’s because he made the call to dump the entire 2021 Warner Bros. slate on HBO Max the same day the films debuted in theaters. The move infuriated filmmakers, but lit a fuse under the HBO Max rocket. From “Wonder Woman 1984” to “The Matrix Resurrections”, movie fans have been able to enjoy an entire year of blockbusters from their couches.
That daring move gave HBO Max an unprecedented edge against its rivals that were hampered by the pandemic. Disney stumbled back and forth, dumping some films on Disney+ without a theatrical run, allowing same-day streaming for some films with Premier Access, then abandoning the plan for theatrical-only releases once again. Paramount chose to shelve its 2021 blockbusters, leaving Paramount+ as a virtual ghost town for much of the year. And Netflix was stuck hoping for a breakout “Squid Game” hit without the IP advantage WarnerMedia has.
Kilar’s time as CEO is winding down. Discovery boss David Zaslav will take over when the companies merge. But how will history judge Kilar’s contribution? And what’s next for HBO Max and streaming at large? Kilar shared his reflections on the Recode Media podcast.
On the Same-Day Release Strategy
We’ve learned a lot, and I’ve been really happy with the decision. I say it because of the information that I get to see, which is how people are responding to the strategy both in their homes in terms of streaming and their consumption, and people that decided to come on to the service. And also in terms of what we’re seeing all over the globe with regards to having theatrical releases.
We’re the only studio on the planet that has given 18 major theatrical releases a global release with marketing budgets to support them. And when you combine that with the streaming window that we introduced in the U.S. market, the day-and-date, I’d argue it’s mattered. It’s mattered for our participants. It’s mattered for customers. And it’s also been very important for WarnerMedia.
On the Launch of Ad-Supported HBO Max
We’re really bullish on it. Let me explain why. In the early part of a market evolution, the premium (model) tends to be what most people adopt. And the premium, in this case, is the ad-free version of a streaming service, whether you’re talking about Hulu, back in 2008-2009, or HBO Max in 2020 and 2021. Today, though, the majority of people that subscribe to Hulu choose the lower-priced ad-supported version. And I suspect that HBO Max will follow a very similar path.
And I say that because when you look at the global opportunity for serving people, in terms of moving them through story, I think that advertising allows it to be more affordable for more people around the world. So I happen to believe that the best approach is (to) empower consumers with choice. And if they want to choose an ad-free experience, that’s fantastic. We have one of we have a version of that — it’s called HBO Max. And if they choose to have a lower price that’s made possible by the presence of thoughtfully executed advertising, we have that, too. And there’s a third one that I’m also a very big believer in, which is free ad-supported linear television over internet protocol (FAST). I think that you’re going to see that dramatically rise over the next decade, because again, there’s a billion people plus in this world, and there’s a certain market for paid subscription. And I’d argue there’s a very large market as well in terms of number of people that will choose free ad-supported as well.
On Sports and Streaming
When you think about the level of passion that people have for sports… I think sports is absolutely going to play an important role in the internet going forward. And by the way, I don’t in any way mean to suggest that we’re going to see an exodus in terms of the pay-TV customer experience, because that’s a good business. And by the way, it’s a good business, because in the U.S. market, over 73 million households choose that product for how they get news, sports, and entertainment.
One of the things that the market oftentimes sort of assumes is that a pure-play is the best way to go here. I strongly disagree with that because of the nature of this business, the nature of all these businesses, whether it’s Netflix, or WarnerMedia, or Disney or Amazon, is that you invest a lot of capital upfront in a highly speculative way, about characters and settings and worlds and stories. And then it’s your obligation to serve as many customers around the world. And that includes Internet Protocol, of course, but it also includes coaxial fiber, and satellite, and any other means of transmission to meet the customer where they want to be met.