HBO Max So Far Merits A Grade Of C+ As “An Opportunity Lost,” Analysts Say

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Two days after the launch of HBO Max, the two lead analysts at MoffettNathanson are less than impressed.

Michael Nathanson and Craig Moffett began their twice-monthly conference call for clients Friday with their early reactions to HBO Max, WarnerMedia’s long-awaited entrant in the increasingly crowded streaming space. It joined Disney+, Apple TV+, Peacock and Quibi as recently launched challengers to Netflix and other established players.

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“It’s hard to imagine that it could have followed the imagined script more closely,” Moffett said, alluding to the initial concerns he and others raised about the strategy of balancing HBO Max with legacy operations. He assigned a grade of C+ to the effort, which he described as “chaotic with the mess of brands that they’ve got.”

Moffett praised WarnerMedia for landing a key distribution deal with Comcast, but he said the lack of deals with Roku and Amazon remains a concern.

While Disney came in for some downbeat assessment elsewhere on the call, Moffett praised the “theme park” approach to navigation on Disney+, which emphasizes five brands: Pixar, Marvel, Star Wars, National Geographic and Disney. Given the paucity of originals on Disney+, Nathanson agreed that it was a “clever” approach by Disney.

On HBO Max, by contrast, “The brands don’t resonate the same way because they aren’t as clear,” Moffett said.

Nathanson described it as an “opportunity lost” thus far, cutting some slack for the COVID-19 production shutdown, which forced the shelving of the Friends reunion special, which had been planned for launch. “That would have been the cool, must-have thing to get people to sign up,” Moffett agreed.

There is a “lack of new, buzzworthy content” on the platform, he added. “Pricing is high, the buzz is not there.” Even though his own children are in the desired demographic, “Nobody came to me yesterday and said, ‘We should get HBO Max now, dad,'” he said. Given the explosion of overall streaming across the marketplace, HBO Max is so far a “failed opportunity” to capitalize.

Based on his recent conversations with stakeholders in the advertising and streaming sectors, Nathanson added, a long-awaited distribution deal with Roku for HBO Max is “going to take awhile.”

While WarnerMedia was able to run the table on pay-TV providers, securing Comcast as a distribution partner on launch day, those deals offer more flexibility. WarnerMedia and operators can “horse-trade” Max coverage for favorable terms for properties like regional sports networks. Roku, by contrast, is purely focused on streaming and has attained big enough reach — at 40 million U.S. homes — to start driving harder bargains on carriage.

Moffett said HBO Max’s $15 price point and confusion with parallel HBO-branded services leaves him “sort of unmoved by the whole thing.” In order for HBO Max to be deemed a success, he said, “it has to be way beyond” penetrating 30% of the U.S. market, which he said was a high bar given the core offering of HBO and its longtime premium niche place in the ecosystem.

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