One Week In, HBO Max's Rollout Hampered by Brand Confusion, Carriage Disputes

When Ross Clugston went to watch the HBO dark comedy series Run a week ago, he ran into a problem: He couldn’t find his HBO Now app on his Apple TV device. He eventually discovered that his usual method of accessing HBO had gotten a major facelift, courtesy of WarnerMedia's new streaming service, HBO Max. “We had to figure out this weird way that HBO was now HBO Max, and then we had to download it and find our way in that,” said Clugston, executive creative director at marketing agency Superunion. “I think that’s the story here: the story of HBO fragmenting this brand.” HBO Max, WarnerMedia executives have said, is intended to build on the prestige of the HBO brand name with a doubled-in-size catalogue of programming that appeals to the whole family. "This is not the prestigious brand voice of HBO,” WarnerMedia Entertainment CMO Chris Spadaccini recently told Adweek. “It's also not the sentimental brand of Disney. It's completely original, designed to be expansive and additive to HBO, focusing on some key growth segments: It's families with kids, young adults, female-centered programming.” That brand expansion is, by some metrics, off to a good start: A week after launch, some of the most popular programs on HBO Max are kids shows, according to data from Parrot Analytics. But the introduction of a new brand has also come with some major speed bumps for users and potential customers, who have to work through not just a new app but a web of rules about whether or not they have access to the service, which for now is not available on two major connected TV platforms: Roku and Amazon Fire TV devices. That could spell trouble for potential new growth. How customers get HBO makes a difference [article_summary section="1"]“Consumers don't do well with confusion,” said Dan Rayburn, a principal analyst at Frost & Sullivan and conference chairman of the NAB Show Streaming Summit. “Consumers pick services that are easy to use and that they can understand.” [kickout id="1"] The new streamer, HBO Max, is not to be mistaken for HBO (the premium cable brand accessible on cable and through various television providers), HBO Now (the standalone streaming option for people without cable who want to watch HBO shows) or HBO Go (the streaming-only option for cable subscribers, who enter provider login information to watch). HBO Max declined to comment about brand confusion in the first week of launch, though executives had repeatedly attempted to distinguish the different brands in the months leading up to Max's debut. However, that distinction was still lost to some consumers throughout the launch, who tweeted about their questions enough for Twitter to pull together a section explaining some of the differences in its “For You” section. One of those confused consumers included Clugston, who wondered whether HBO Max would end up “doing HBO a disservice” by merging it into a larger, broader offering like the one he discovered he was eligible for on launch night. “I can definitely see the logic behind grabbing hold of a brand that people are really familiar with and attaching an add-on, but I think people are just looking for their shows and where they live right now,” Clugston said. “It can be a little bit hard to distinguish what content can be found at what destination.” [article_summary section="2"]Even if consumers got past the new branding and are able to understand the difference between HBO and HBO Max, they then had to face another hurdle: the web of carriage agreements governing who is eligible to get HBO Max and where they can get it, which are so complex that they've prompted explainers (including from Adweek) and flowcharts. It's a challenge that stems from HBO's legacy in television, which requires separate carriage contracts with each distributor. That means billing for HBO is still tied up with those various providers, instead of a single direct-to-consumer point of entry, and that disparity means contract disputes are already a part of the HBO Max legacy. While most customers paying for HBO through a cable or service provider were able to use their cable credentials to log into HBO Max and set up accounts (including Comcast customers, who were added the afternoon of launch), two major players were left out of the automatic upgrade: Amazon Fire TV and Roku. The two companies comprise a major segment of the connected TV market: Roku has nearly 40 million active users, about 30% of the streaming market, and Amazon Fire TV devices have claimed a similar active user set. Additionally, nearly 5 million HBO subscribers access the channel through Amazon Prime Video. A week in, the companies still haven’t struck agreements, and spokespeople said there was no news to share on possible deals. "Our goal is to make HBO Max available on every platform possible to as many viewers globally as possible so they can enjoy beloved shows from HBO, the Warner Bros. movie and TV library, and a diversity of hit programming exclusive to HBO Max," a WarnerMedia spokesperson said. "We look forward to reaching agreements with the few outstanding distribution partners left, including with Amazon and on par with how they provide customers access to Netflix, Disney+ and Hulu on Fire devices." Complicated launch is a 'blessing a curse' That lag, though, could cost the company some converts, Rayburn said. “The average consumer doesn’t track our industry the way you or I do, so they’re going to say, ‘It’s not here on Roku and Amazon–but I thought the service came out!’” Tony Goncalves, CEO of Otter Media and the leader of Max’s development and general management team, acknowledged the complexity of the product launch, but said switching over consumers who come to HBO Max through various touchpoints was preferable to building up a consumer base from scratch. “Is it complicated? Sure,” he told The Verge. “But will I take an existing business with an incredible content library and incredibly iconic brand that is aspirational like HBO versus zero? 100 percent. I’ll take the blessing and the curse all at the same time.” HBO Max has debuted with a modest lineup of originals, a slimmer portfolio than expected due to the continued production shutdowns amid the Covid-19 pandemic. While the service also didn't have a blockbuster hit like Disney+'s The Mandalorian to buoy first-week numbers, WarnerMedia executives have previously said they’re looking to build HBO Max for a marathon, not a sprint. Executives have previously estimated that Max will reach 36 million subscribers this year (including the more than 34 million existing HBO subscribers) and another two million in 2021. The hope, eventually, is that the streamer will ultimately form the cornerstone of the company's streaming ambitions, which are aimed in part at making the rest of AT&T’s wireless businesses stickier. But in the difficult business of building a streaming service, that success—50 million subscribers in three years' time, execs have projected—ultimately requires sustained attention from customers facing down more options than ever. And that's much harder than it sounds. “There’s so much choice in the market, so why assume customers are going to jump through hoops to figure out where to get your content and on what platform?” Rayburn said. “Consumers are finicky, so they [could] look at this and go, 'Oh, it’s not available? Screw it, I’ll cancel HBO and spend my money somewhere else.'”