WarnerMedia open to letting competitors sell ads on HBO Max

WarnerMedia is two years out from launching an ad-supported version of its streaming service, HBO Max, but it already seems to have plans to let competing media companies sell ads on the platform.

John Stankey, chief executive officer of WarnerMedia, said yesterday (18 November) at Code Media in California that his company will never have “a monopoly on creativity,” so HBO Max will naturally host content from competing media companies, who in turn will likely be able to sell ads against their content.

“We fully expect that once the AVOD (ad-supported video on demand) environment goes up, it’s not just going to be our content and our avails and inventory that’s in that environment,” said Stankey. “We very much would love this platform over time to receive content from others, as well as inventory from others to go with that content.”

This resembles the current distributor-network relationship in traditional linear TV, where both sides control a portion of ad inventory. Streaming disrupted that relationship as networks started launching their own services where they have full control over inventory.

The move toward streaming has also meant a move away from the traditional TV bundle. Stankey sees HBO Max as eventually ‘rebundling’ the fragmented TV ecosystem, thus opening up the platform to other media companies and recreating the distributor-content owner relationship for the streaming era.

“At some point there will be platforms that reaggregate and rebundle,” said Stankey. “We’d like [HBO Max] ultimately to be a place where reaggregation occurs. That doesn’t just mean our content.”

The plan to let other media companies sell ads on HBO Max could also be a key selling point for distributors as AT&T, WarnerMedia’s parent company, negotiates distribution deals with pay-TV providers.

Stankey also touted the “value proposition” of Xandr to provide distributors and other media companies a “nationwide basis of customer information” to help monetize inventory.

When asked about competitive separation, especially in regards fellow pay-TV giant Comcast, which has its own adtech stack and streaming service, Stankey said there are “firewalls that are set up internally” at Xandr to ensure everything is performed on a level playing field.

“There certainly are others out there beyond Comcast who can bring inventory and content in that may find it to be an acceptable arrangement,” said Stankey, prefacing that he didn’t want to speculate on his competitor’s plans.

Comcast has yet to respond for comment.

Xandr’s ad marketplace has AT&T owned-and-operated inventory and inventory from third-parties such as Bloomberg and A&E Networks. A Xandr spokesperson said the data used to help place those ads is safeguarded behind a firewall.

The spokesperson added that Xandr would be the only monetization partner for HBO Max, mirroring the relationship the advertising unit has with AT&T TV and AT&T TV Now.

When asked to confirm if that meant competing media companies and distributors will be able to sell their portion of ad inventory on HBO Max directly, the spokesperson said, “We will have more details closer to the launch of the AVOD service.”

HBO Max will go live ad-free next May for $14.99. The ad-supported version is slated to launch in 2021.

Similar to how Hulu currently operates, Stankey thinks streaming providers will ultimately need a “two-sided monetization” model, where consumers can choose between an ad-supported or subscription offering.

“I do believe that if a customer wants a broad selection at the most affordable price point and the most optionality, we’re going to see both subscription and ad-supported models out there,” said Stankey.