The Vergecast - The head of HBO Max on launching without Roku, adding 4K HDR, and the Snyder Cut

Episode Date: June 2, 2020

Verge editor-in-chief Nilay Patel and Verge reporter Julia Alexander talk to Otter Media CEO Tony Goncalves on his new project overseeing HBO Max. Goncalves discusses AT&T's strategy for the WarnerMedia streaming service, the dispute with getting the app on Roku and Amazon, HBO Max's place in the streaming wars, and how their data usage works on mobile. Learn more about your ad choices. Visit podcastchoices.com/adchoices

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Julia Alexander and I sat down with Tony Gonzalez. He's the executive at AT&T responsible for HBO Max, the company's new streaming service. Tony's actual title is CEO of Otter Media, which is the division of AT&T that's doing HVM. It's a complicated org chart. We made Tony explain it to us. We talked to Tony the day after HBO Max actually launched,

so we heard about how the launch went, how it's going. We got deep into the strategy for a series, HBO Max, how it's rolling out. The dispute with Roku and Amazon, HBO Max, isn't on those platforms yet, and broadly the future of the streaming wars. It turns out, Tony doesn't like the term streaming wars at all. You'll hear about it. Here's one thing I want to call out. I asked Tony, point blank, whether AT&T would excuse HBO Max from its data caps or give it priority access to its network over Netflix and other services. You'll hear it. Tony said they've had the conversations about it, but he didn't know the answer. As it happens, I later talked to an AT&T executive

familiar with the situation, who told me that HBO Max is indeed excused from AT&T's data so if you pay for a plan that has 10 gigs a month of data, Netflix will use that data, but HBO Max will not. And if you have an AT&T unlimited plan, you probably know that there's a cap on the amount of data you can use before your speeds are throttled. Well, HBO Max won't count against that either. According to the executive I talked to, all this is accounted for with something AT&T calls sponsored data, which theoretically allows any company to excuse itself from the data caps. The difference here, of course, is that AT&T owns HBO Max. So it's essentially paying itself. It's just moving money from one part of AT&T to another.

If Netflix or Hulu wanted to be excused from the data caps, well, they'd have to pay AT&T real money. It's pretty tricky. So that's that complexity explained. All in all, there's a lot going on in this interview, everything from marketing strategy to whether or not there's going to be ad-supported version to the Snyder cut. And data cap question aside, Tony wasn't afraid to go deep on how he and AT&T are thinking about HBO Max.

Check it out. Tony Gonzalez, CEO of Otter Media. Tony Gonzalez, you're the CEO of Otter Media at AT&T, which importantly means you're in charge of HBO Max. Welcome to the Vergecast.

Thanks for having me. Awesome day. Yeah, HBO Max launched yesterday. Can I quickly just ask you, are you going to change your title to CEO of HBO Max? It feels like that you should be out there being like, I'm the HBO Max.

Like when we were doing this, I was like, Otter Media, like, there was a thing. But HBO Max is like the thing now. Are you thinking about changing it? No, look, Otter Media is still a thing. And it's a digital first fan-centric media company. And that's essentially what HBO Max is. You know, it's leaning digital for a company like WarnerMedia.

And it's about serving fans. But I spend very, very little time thinking about my title. I just like being close to the metal team that makes great stories, builds great products and puts them out in the marketplace. You can call me janitor for all I care. Look, we've got a title, the podcast episode, something. So that's what you want. We'll go with it.

But actually, give people your backstory. Before we started just a minute ago, I was joking with you. Like, you haven't done a lot of podcasts or videos or stuff like that. Give people just your backstory to give a sense of, I mean, you've just been in and around AT&T, DirecTV. Just give people the 30-second version of this, the 10-second version of this. Well, I don't know if I could do it in 10 or 30, but I'll try. Try. You can edit it down. How's that?

Sure. Look, I've been around the sort of AT&T companies for longer than I probably would like to admit. But I've actually been in, you know, I've been in this industry also a little longer than I'd like to admit. I was at DirecTV for, you know, a good chunk of time. Had a number of jobs, you know, roles there. And, you know, when AT&T came knocking to acquire the company, I was running the digital products group. So I was essentially charged with, you know, transitioning a satellite pay TV operator into a modern world of, you know, digital and mobile, you know, content aggregation and delivery. You know, I'd be lying if I told you that I was excited to sort of come along for the ride when AT&T came along.

But, you know, given the work that I was doing and the platform that AT&T was and the vision that John Stanky and Randall Stevenson had to bring connectivity and content together, I jumped on board. and man, I have just never looked back. You know, when I was at DirecTV, I spent five years trying to build direct TV now, right? Trying to take the company over the top. And it took me five months at AT&T, sort of make that pivot, which ultimately is, you know, kind of what led to, you know, a moment like yesterday with HBO Mac. So I did that for a bit.

I was ahead of strategy, kind of sat along John for a bit of time, worked on the vertical integration strategy to sort of, get into the content space. I oversaw the, you know, the investment in outer media and at the right time sort of took the helm of that business and turned it from, you know, it was essentially a set of venture investments to an operating company. And then last year, John called and asked if I'd be interested in taking the charge and taking the lead on HBO Max. And, you know, I was ecstatic and giddy. So here, here we are. So HBO Max, the streaming service is part of Otter Media inside of AT&T.

You're the CEO of Otter Media, and that reports up into the larger Warner Media portfolio, which reports to 18T. I just want to make that org chart is, I think most people don't see it, but your group is in charge of HBO Max the service. Yeah, so I report into WarnerMedia Entertainment, which is Bob Greenblatt's division inside of WarnerMedia. And, you know, I'm overseeing the portfolio of outer media companies as well as the, you know, as well as the development and launch and the business operations of HBO Max.

AT&T is just like such a big company and there's many, many names. So I want to make sure people get a sense of your responsibility. That said, it launched yesterday. Congratulations. That's always exciting. How'd it go? Look, I've been around, you know, launches of new products for a long time. I've done a few.

And so I've seen the good. I've seen the bad. I've seen the ugly. Yesterday was a pretty incredible day. I mean, we launched a product, I think, seamlessly, and we put an incredible volume of great stories in front of consumers. The passion and engagement that we're seeing around the content offering is just, you know, it's incredible.

And so, look, all in all, we had a great day yesterday. The team had a great day. The company had a great day. You know, the ink is dry on Chapter 1, and we're having to start writing chapter two now. Just give me a sense of, on a launch day, how are you spending your time? Are you just watching a dashboard of signups? Are you on the phone?

Are you just watching old episodes of Aquatine Angerforce? How are you spending your time? Yeah, look, success in an organization is when you build systems under which, you know, people sort of take the helm and run with something of this order, magnitude, right? And so you spend a long time sort of organizing and putting, you know, people in seats and laying out priorities and building process to enable a seamless launch. And so I was actually talking to somebody about this earlier this morning. I love being in the engine room. I love touching. I love being, you know, close to the metal. But obviously,

the environment we're in right now doesn't allow for, you know, physical, war rooms to be, you know, to be part of the launch plan. And so we have to virtualize just about everything. And so I spent a good amount of the last couple of days on calls, you know, just sort of ensuring that folks had the resources that they needed to go. And then on Slack channels, watching the activity and, you know, again, supporting the team when they needed to be supported and getting out of the freaking way when they didn't need anything for me. But, you know, monitoring a Slack channel or two or three and just watching the team sort of hit go on X platform, hit go on Y platform, you know, identifying issues and, you know, quickly resolving

them. That's how I spent probably, you know, my last 24 hours or so. I am interested just because now you guys are officially, I think, in this streaming war space in a way that even with DirecTV now, which is now AT&T TV now, wasn't in many ways. By this time, in November 2019, after day one launch, Disney had come out and said we hit 10 million subscribers. They were very happy with that. And I know Stanky the other day said we're not trying to compete with Netflix. We're not trying to compete with Disney. But the level of success tends to be measured now in the streaming war space with subscriber numbers. And I know that you can't give them to us unless you would very much like to give them to us. But I'm interested to know where your levels

are in terms of people coming on with new customers versus people rolling in from HBO. subscriptions and kind of through their own cable packages that you have partnerships with. Yeah, look, we're not, we're not in the place to reveal numbers, though I think it feels to me like you're going to ask me that a couple of times today. Like six times. It's on here like easily six times. Early, early, early, early innings. But I think a couple of things, I think to that question. You reference streaming wars a couple of times in that question. And I have to tell you, I just have a very different perspective of that term. Like, I think it's largely a misnomer. Like, we're not at war. We're just in a period of change in how consumers engage with

content. I like to think about it as we're in a period of reaggregation of content, and you're seeing these super networks emerge. And it doesn't look that different than when broadcast TV launched, when you had a few television channels, networks that aggregated content delivered it over broadcast. And we're sort of in a position now where, you know, content is being aggregated at a much, much larger scale in and around these incredible brands. and delivered over the internet. And so there's room, I think, for more than one, I think, is the, and so it's not a zero-sum game. It's not a winner-take-all. I really think we're just, you know, we're in a period of, like, super networks are emerging, and it's great for consumers.

It is fair to say, though, that you guys are currently at war with a Roku and Amazon. Like, there's a debate happening, and in many ways, it's like a reverse carriage dispute that we're seeing where these aggregators now have a lot of power, because people are. are using them to watch the streaming services. It's why Disney made a last, you know, 11th hour deal with Amazon. It's why we're seeing all these things happening. Obviously, you guys did an 11th hour deal with Comcast yesterday.

Amazon, stanky is pretty much said probably not going to happen right now. Roku, the obvious question, he did insinuate at a recent conference that the partnership was coming. When is that coming? Because it was funny to me yesterday seeing Roku trending above HBO Max because people were like, how do I watch this on, Broko. Yeah, look, being on the platforms that being available on the platforms that consumers use to access these new networks, really, really important. But there are certain business models

that exist. And we each sort of have our own. Look, I just go back to the fact that I think we're just starting from a very, very different place. Look, we have 30 plus million existing subscribers that have already gone in their pocket and voted to subscribe to a product and we're making that product better. We think the value prop is there. We just want to be treated fairly. We want to, you know, look, you can't Disney Plus and Netflix and Hulu and these other apps, you know, are on those platforms. And there's a certain business model that exists. And we just, you know, we just want, you know, we just want the same one. And, and ultimately, I look, I'm hopeful that ultimately will get there and we'll get there with the consumer in mind.

But, you know, we just didn't get there day one. Have those 30 million subscribers you mentioned automatically upgraded? Are they now in the max space that you're seeing? Because it feels like that's the obvious upgrade. So you guys should have, you know, Max should launch with 30 million because there's that's an all customer base you're already rolling up. Are you seeing that translate 100%? We're not, like I said, I'm not, I'm not, that's you, that was the second time you

asked about, about numbers. I shouldn't have told you it was six. I'm not in a place to sort of go into the details on the numbers, but look, we can do the math in and around, you know, how many, you know, how many MVPD subs, how many HBO subscribers, sorry, have access to the product. And, you know, we think we've got a compelling, compelling content offering. But it's just not a sprint. Like, it's going to take, it's going to take time. It's going to take time. And we're, we're excited about the journey. Let me, let me just try to unpack the Roku dispute for the audience of it because it's really complicated

on every level and I just want to get your perspective on it and also hopefully have the listener kind of understand what's going on so Roku makes almost no money selling hardware they make all of their money taking a cut of in-app purchases running ads all that kind of stuff are you saying that the deal that the Netflix and the Disney's get on the Roku platform you're not getting they're offering you the same deal or you want a better deal than the Netflix's and the Disney's get

for in-app purchases, sign-ups, all that stuff. Look, I don't know what specific deals that others have with either Roku or any other platforms. But I know the deal that we have with Apple. I know the deal that we have a Google. I know the deal that we have with the other platforms. And there's a certain business model. And we're happy to pay people to help us acquire subscribers. And it's a, again, it's a pretty standard way of doing business.

And so I don't want to get too deep into the details of the, you know, of the impasse, if you will, that we're in right now. But, you know, but there's a pretty standard way of bringing these apps to market on these platforms. And we're, you know, and we're focused. And that's what we're focused on doing. I'll just ask. Are you just, like, you're just going to hold out until, like, the Snyder cut hits. And then, like, an army of DC fans are like, I want this on my Roku and they have to cave.

Because that's like what happened with like Fox in the Super Bowl, right? At some point, Fox just had to cave and give Roku subscribers the Super Bowl. Are you, are you saying eventually that the demand is going to be so high that Roku is just going to have to cave? Look, you know, I don't know if caving is actually the way to think about it. I just, I think the consumer wins at the end of the day. And I think we've put together a product offering that has multiple Snyder cuts, right? It's got multiple. It's got, it's got,

is that a positive or a negative that there's multiple Snyder cuts? No. Look, I referenced Snyder Cut. The reference to Snyder Cut there is that it's a, it's a passionate fandom. Yeah. Right? There's a passionate fandom around friends. There's a passionate fandom, you know, around Harry Potter.

There's a passionate fandom around, I mean, you name it on that platform. The D.C., you know, the D.C. library. There's a passionate fandom. fandom around Crunch Roll, passionate fandom around Studio Ghibli. There is a difference, though, between a fandom around the Snyder Cut, which has targeted a lot of directors who have worked with Warner Brothers, has targeted groups on Twitter, and although there's positives of that fandom, there are a lot of overwhelming negatives, which many smart critics have written about.

There's difference between that fandom and a Friends or a Harry Potter, which hasn't necessarily gone out of their way for three years to demand certain things in the kind of way that the Snyder cut fandom has. And I wonder if you worried all about the precedent that sets, because right after that came out, they started, we're going to get an air cut for the suicide squad of David Ayercut. And I genuinely wonder if that was something that Warner Media took into consideration when they made that cut was this, what does it look like the precedent that it sets right now? Yeah, look, definitely not a precedent. And you're right. There's different types of fandoms. There's the fandom you just described.

and there's, and there's other fandums. I just, my reference to the fandums is the fact that we're in a space where, you know, consumers are loud, consumers guide. And yeah, like, we have to, you know, we absolutely have to listen, you know, as industry. I had a boss that, you know, once said, you know, industry and consumers aren't always aligned, but consumers do tend to win. look, it's a fine balance. And I think, you know, I think when it comes to video, when it comes to entertainment, when it comes to content, consumers have never had more choice and they've never had more of a voice.

But look, that doesn't mean that you have to go or that we will, you know, go and, you know, invest our dollars in every single pocket and every single fandom that exists. But I think the reference to the Snyder Cut and the Friends fandom is the fact that, you know, consumers are speaking and we have to, we have to listen. And, you know, doesn't mean that we're going to go redo every movie ever made. But I think that we have to be, you know, we definitely have to have our ear to the ground. And I think we do. I mean, look, I just go back to like, look at the buzz that the Harry Potter Library sort of brought us yesterday. It was like a wonderful surprise in the light. It's because consumers are passionate about, you know,

about these franchises. So there's, I have a, just not to over compare it to Disney, but when Disney Plus launched, similar buzz, but oh my gosh, here's all the Star Wars movies. Again, they've been hard to get. And then another thing that I heard particularly in the nerd world I live in is, wow, I can watch all those Star Wars movies in 4K HDR with Atmos, right? They got remastered for streaming. You can deliver them at higher quality.

HBO Mac so far, no 4K HDR, no vision, no Atmos. Is that stuff coming? Was that on the roadmap and just too hard to do? Is that a remastering problem? What does that look like? Yeah, look, there are, I can, you know, man, if you want to go have, I'm not going to go have a feature dialogue with you, but as somebody that likes to get close to the metal, I can tell you that there are a lot of, there's a lot of features, right?

And a lot of, a lot of capabilities that we'd like to, that we would have liked to launch with that we did. And it just comes down to like a matter of priority and getting a product to market. It's not, when you're, you know, when you're asking about 4K and HDR and Atmos, like, not unimportant and definitely something on the roadmap. It had to be a deliberate choice, right, of what to launch with and when. And look, those tradeoffs happen daily. And so, look, it'll come.

It wasn't forgotten. I think it was just a deliberate prioritization. But you're going to have to go and rematch. If you said you can watch all of Game of Thrones in 4K HDOR. And we, in the scenes that are too dark, aren't too dark anymore. And it's an Atmos audio. so you can hear the dragon, everyone would just rewatch Game of Thrones tomorrow, right? And you would drive that subscriber base.

Is that on your mind is a thing that you think will drive subscribers? Look, you have to remaster, you have to re-engest, you have to build capability into the product, and then you have to sort of step back and say, is that something you do today? Or is that something you do in a month? Is that something you do in three against what other priorities? And so, yeah, do I think that it'll, yes, it'll, Every individual feature or capability has an opportunity to drive customers and drive acquisition, drive engagement. And look, we think video quality is one of them for, again, a certain type of consumer and a certain fan base.

So, you know, I'm excited for the day that, look, I'm a geek. I'm as much of a product than a tech geek as I am a business geek. And so, you know, I personally can't wait for the day that I can rewatch Game of Thrones to your to your example, you know, in 4K and HDR and Atlas. And that day you'll come, along with many, many, many, many other features and functions like, you know, that the team is, team is working on diligently. You mentioned that there were certain things you just had to leave off at launch because you're launching these, we know these things happen.

Weeks, months ahead, you start working on things. When HOMX did launch yesterday, there were a couple of people on Twitter, more than a couple, who were pointing out that there were search problems, that certain episode misfunctionings were happening. And I'm just wondering what are the biggest issues that you guys saw on day one, because every company that launched the streaming service

has issues, like it just happens. And what are your most high prior right now in order to get fixed? Yeah, look, there's a long list, but it's actually not as long as one would expect. And I think you just pointed to some of the, you know, some of the opportunities and some of the things that people are working on. You know, so largely, you know, metadata, which then ultimately is what sort of drives,

you know, drives some of the search issues, et cetera, is one of them. And the team is working on that today. I think that's largely the issue. I mean, look, I can go down, I can go down a long list of things that people actually haven't seen that, you know, that exists. I'll trade you. I'll trade you one of the user number questions for one of those issues. How's that? We'll just do a horse trade right here.

No, we're not going to do that. We're not going to do that. I got to take my shots where I get him, man. Like I said, I've been through a number of these launches. We had a really solid launch yesterday. You expect some issues. And like I said, I think the issue that you're pointing to is one. But, you know, this is pretty solid all in all.

There was a thing that went around Twitter. Things go around Twitter often. There was a thing that went around Twitter yesterday that I thought was funny, and I just wanted to get your opinion on it, which was somebody noted that HBO Max didn't crash, which is very impressive because Disney Plus crashed when it launched, and someone pointed out, I wonder if that means that there just weren't as many people signing,

like playing it at once, that there weren't that many people on it compared to an overuse John Disney Plus. Again, not to look at numbers and user numbers, but specifically, like, what was that day one activity? Like, were you guys seeing spikes the minute it kind of launched? Or was it pretty steady throughout the day? Were you guys seeing the usage numbers you wanted to see day one? Julia, I got to commend you.

You are so good at your job. You were trying 15 different ways to kind of get at an answer. That's four, by the way. I just want to point that out. I'm just going to, it's four. I'm just going to put it to the empty degree because I'm sure it won't be the last. Here's another, like, here's just another example of, like, we're just starting from a completely different place. This is the platform that have five million concurrent users on a Sunday night

watching Game of Thrones. So we've been through the scale, the scaling, you know, journey of the platform. Like, we didn't start writing code from scratch. We started redesigning apps from scratch. We started building, you know, building new features from scratch. But this is a, it's a pretty, strong foundation that we built on, right? And so, but here's what I will tell you, just to get you, just to give you a little bit of a nugget. We were incredibly pleased with the amount of engagement that we had on a per user basis on the platform. The fact that there was double the content on the platform versus what exists on HBO, the fact that the content was indeed broader and appeal to multiple demographics definitely gave us a sense of comfort that it was

resonating with consumers. Now we got to go sustain that, right? And so look, a lot of focus on yesterday and sort of the launch of yesterday, but let's remember, man, this is a long, long road. We close chapter one. We are now writing chapter two. And this is going to be, this is going to be volumes and volumes of volumes. It's not going to be one, it's not going to be, it's not going to be one movie dick. It's going to be many. And we're just at the beginning. Support for the show comes from Framer. Framer is an enterprise-grade, no-code website builder, used by teams at companies like Perplexity and Muro to move faster. With real-time collaboration and a robust CMS, with everything you need for great SEO,

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Terms and conditions apply. So you brought up the notion that you've already had a platform doing this. This is something to me that I didn't quite realize. HBO Max is built on the bones of HBO Now, right? When I got the app yesterday, my HBO Now app upgraded to HBO Max. Is it the same basic infrastructure there? Yeah, it's the same infrastructure that, you know, that then was built, was adapted for, you know, multi-tenancy, right?

So, you know, the HBO Now app had all of the HBO service, HBO Max now built on that platform as the HBO service as well as a variety of other, we'll call them content hubs. And so we had to, you know, we sort of had to adapt to that. And then, yes, we have to build incremental functionality into it, right? Curation and, you know, editorialization of content, the download capability, et cetera. But it is at the core. It's the HBO Now platform, which, like I said, had nearly five million concurrent users at peak with, you know, in support of Game of Thrones. So I think this brings me to the kind of the big question with AT&T's media properties in general, which is that there are a lot of them. They all have very similar names.

And it seems like just understanding how to get HBO Max, how to get it maybe bundled into your Wilersteel or with your cable subscription or how it relates to HBO Go or AT&T TV Now or all of the other things. You might be a direct TV subscriber. Is that going to get cleared up? Because it seems like that is the biggest confusion that AT&T as a company needs to solve is directing people to the appropriate product offerings in making it simple to just buy them. So is your question, is it going to get simpler for people to buy HBO Macs? I think my question is, can you name all of the HBO media properties that exist and how much they cost? Because I couldn't right now.

And yesterday, when people were asking us, like, we were like, do we need to just write an article to service the, like our reader interest in how many AT&T properties are there and how do they relate to each other? Yeah. Look, you know, it's it's actually two, I think those are like two different. It's two different questions. And so I'll take them, I'll take them in those buckets. Like, AT&T is a holding company and AT&T has many products, including broadband products, including mobile products. Yeah, it's a portfolio of consumer and business to business products. One of those portfolios is the media company in which HBO sits.

So I'm going to take the video question and sort of like I said in like two buckets. One, it's the direct consumer sort of more S-Fod on-demand kind of bucket. And then the second is the MVP piece. And AT&TTV has been sort of, we'll call it the rebranded of a rebrand of a a variety of AT&T video offerings, and that's where the company landed. So they're in the process of rebranding. But that's the MVP product, right? That's the pay TV product.

I think the question you're ultimately asking is a question that's not unfamiliar, right, to me, because we get asked a lot. It's like HBO Go, HBO now, HBO Max. And so let me try to simplify. If we were starting from zero, it actually be really easy because there wouldn't be any legacy, but there wouldn't be any subs. There wouldn't be any, any, any, any, any, any, any libraries to sort of build from. And there wouldn't be any revenue to build a new product from. And so, yeah, is it complicated?

Sure. But will I take an existing business with an incredible content library, an incredibly iconic brand that is aspirational like HBO versus. Zero? 100%. I'll take the blessing and the curse all at the same time. Now, you're asking a very, very specific question, and I actually think it's important to kind of get to that question. HBO Max is our platform, and it's going to be our workhorse. I said it during Investor Day, I've said it in a couple of interviews, and I think it's really, really important to do that. All that said, we are not leaving customers behind. If they choose to engage with HBO Go, And that's where a cable subscriber wants to consume HBO content, we're going to let them for a period of time.

And you pointed to your experience with HBO now, which is the app just got upgraded. And so where we can and where we feel it's appropriate, we'll upgrade the app. I think in the next three to six months, it's going to become evident that HBO Max, right, is our workhorse and is our, you know, and is the platform where multiple brands will come. But, you know, we've got consumers to serve. We've got business partners to serve. And we're in a bit of a transition. So, you know, look, I commend you for the question because it is, it's an interesting one and it drives a lot of dialogue. But, you know, Apple and Google users yesterday got an incredible surprise in delight when their HBO now app just, just upgraded itself to double the content, downloads, editorial, et cetera, et cetera.

you know, ultimately, ultimately, we'd love to get everybody there. But it's a bit of a, it's just a bit of a transition period. And like I said, I'd rather take the transition than start from zero. You said HBO Go customers, you'll service them for a while to come. You know, HBO Go is the app you use if you have an existing cable or satellite subscription and you want to log in with your cable credentials and stream over the top, right? That's actually the app I use more than now. I pay for everything.

I really got to stop it. Anyway, cord cutting is obviously dramatically accelerating. Everyone's betting that we're just going to move to services like HBO Max in the future, pay all the cart. Are you just expecting HBO Go to kind of disappear over time as people just cut the cord? Actually, what we're expecting, given the success that we've had in closing the deals with the MVPD community, is that subscribers start using HBO Max as a place to get their HBO service as well as all its other content. And at such time that we feel like a good volume, if not the entirety of the base, is engaging on that platform versus another. We'll make a decision.

But right now, I mean, you just said it, man. Like, you know, you prefer to go to use HBO Go. I really encourage you to use HBO Max primarily because it's got more content. And if you're using HBO Go because you're a cable subscriber, chances are that you can just, you can just log in to HBO Max. Now, look, on the 18th front, you asked another question, which is how to get it. And that's another one. Like, how incredible is it for a company to have built-in distribution

and be able to give consumers incremental value for being a connectivity sub, right? If you're an AT&T premium mobile or broadband or TV sub, you get HBO Max. I don't come out cost. I think what often gets forgotten is how important scale of distribution is in the direct to consumer world. And this company has 3.2 billion interactions with consumers every year. I mean, how strategic is that as part of an offering when you're coming into market like this?

And so I look at, again, embedded bases, legacy problems. products, companies that have been around a long time, you know, it's a gift, quite frankly, I think what we have. We just have to navigate the education, right, for consumers. But consumers have a lot of opportunities to get into HBO Max in a way that I think other folks just just don't have. So, you know, it's funny. We've been talking about TVs and TV platforms, but it's AT&T. It's like a mobile carrier. That's a big business. Have you gotten to the point we're thinking H-Tomax is going to get preloaded on AT&T phones. We're going to bundle the pricing in different ways.

I mean, that's the real win of AT&T owning WarnerMedia, right? It's building new kinds of packages for mobile. Has that happened yet? Or are we just, we got to launch it? We got to figure out our Amazon deal. Like, where are you in that thinking? No, look, that's, I mean, arguably, that's where we, that's where we're starting. You know, if you have a, you know, premium unlimited tier of, of AT&T mobile, you get

HBO Max included. I mean, if you go to AT&T.com today, and, you know, all of the ways that you can get, that you get HBO Max are there. So it is bundle. It's preloaded on the Android phones. It's preloaded on the Android, on the Android OS, ATNTTV box. And it's included with a variety of 18 packages.

So like I said, that's extremely strategic. Like, you know, we have a company that engages with consumers at mass, mass scale that has packaged and embedded bundled the HBO Max product. Does HBO Max hit the AT&T data cap on mobile? Well, if it's packaged in the unlimited plan, right, it's unlimited. And so, you know, by nature. Well, there's still like a 22 gig. I think it's 22, right?

It's unlimited, but after 22 gigs, your speeds drop. And then there's like the video saver. If I want to just watch HBO Max all day on AT&T LT, LTE, does that get preferential treatment to a Netflix or something? Yeah, you know, it shouldn't well know. We are, again, this is a fairly broad question. I can't get preferential treatment. And it wouldn't.

We're treating data the same way for everyone. And so as of right now, it's included in the unlimited data package. I actually, I don't know the answer, frankly, to that question. And I think this is one of the things I kind of drive my team on. Like, it's okay to say, I don't know. So I don't know the answer to that specific question other than it's included in the unlimited package. But we circle back with that. Yeah, I'm curious, I mean, it just seems like that's an obvious, as you're talking about AT&T scale,

it's touchpoints with consumers. It feels like the reason a company like AT&T would want to make a huge investment in Warner, media in building out a platform like HBO Max, and then obviously in this country, without sort of of the net neutrality rules, it would be very easy to say, our platform is going to stream for free, it's going to have higher video quality, it's not, it will always have the fastest data channel available to you versus the suite of, I mean, that's just an obvious advantage AT&T could give itself. It sounds like if you don't know that maybe you haven't even had the conversation. Oh, no, look, we've had the conversation. I don't, I don't know where we landed.

I think on the specifics of on the specifics of data caps. And so I think that's something something I personally have to go circle back on. But I think to your point, the opportunity is to redefine the bundle, right? You know, connectivity and content kind of coming together in the same way that it came together in the early days of the triple and the quadruple play. And I think that's what we're starting to see at this point in time, right? Like the network is the plumbing and the content. is the water, and you're seeing water and, you know, the water and the plumbing kind of,

you know, kind of come together. Not usually what you, you got to work on the metaphor. You usually don't want the plumbing and the water, but I take your point. Bringing it back to the kind of HBO Max as a streaming experience, there were reports, I believe last year that there would be an advertising supported component coming that would be a cheaper tier. I'm wondering if there's any development news on that. Is that still planned?

And if so, what is the branding for that? Is it like TJ Max, HBO Max, where you get like an extra X at the end? And that's kind of how you know that's the ad-supported version. Like I'm just – because I feel like Avod is just as – within the S-Vod world is just as crucial. And I know it's something you guys are thinking about. Is that something you're planning to launch 2020? Or is that a 2021 goal? 2022?

Julia, I am going to invite you into the next marketing and branding meeting because I think that was brilliant. Brilliant. Brilliant. That's a commitment, by the way. Julia's coming to your next branding meeting. That's our next feature. Talk about a sneak peek. You know, behind the curtain look.

Not many get that invitation, by the way. Look, we're on day two of the subscription offering that we've worked really, really hard to get to. And that's, I don't mean to punt the question other than like, That's what I'm focused on right now, and that's what team is focused on right now. That said, I think as a business, a two-sided business model for, you know, a content aggregation platform is really, really important. And we are evolving our advertising-based offering and strategy, nothing more to kind of share at this point, because, again, we are myopically focused on what's in front of us right now. But we do think it's important that we bring consumers.

a variety of different offerings, a variety of different price points. And, you know, this is, this is just, this is sort of just the beginning. Yeah, let's talk about the price point because the $15, I know there's a $12 one year thing that, uh, HBO Max has, which I believe is like about par with Netflix's most popular plan. People were very excited by it. But normally it's 15. And I'm wondering if that is a, I saw that you mentioned that that was what you landed on. And I wonder if there's room for you guys to lower that in the future, especially in this current market where people are losing their jobs. $15 is a lot of money to spend on a streaming service compared to a Disney Plus, which is $7, even an Apple TV Plus, which is $5. And I'm wondering

if there's a chance for you guys to bring that down or if that gets into concerns with the carriers where that's a staple that $15 is in the cable packages. You can't go below that. It's what every other kind of distribution partner you're working with is offering at. Look, a lot of consumers can get it for free. I've referenced it and I'll continue to reference it. You know, 30 plus million subs today, many of which can just download an app and log in with their provider's credentials and don't have to pay it anymore. So that's number one. Number two, you know, a lot of ATT customers can get it for free, just bundled into their connectivity and TV products. And so there's a lot of opportunities to get this product at a lot less, right?

if not entirely less, right? That's zero versus the $15 direct-to-consumer price point. As far as the price point's concerned, you don't go into these things blindly, and there are business implications and there are consumer implications on price points. We could have gotten higher because we doubled the amount of content. We chose not to do that. We chose instead to give people twice the content for the same price as we're offering HBO because those HBO subs have essentially a lot of.

already voted, right, that they would pay. And so, look, pricing evolves. Pricing will evolve over a period of time. You referenced one opportunity to sort of get to a more affordable price point and sort of brought in the funnel with advertising. But again, we have, you know, we have a product that I think offers a pretty unique value prop in the fact that, you know, it's got an incredible amount of content, high quality content. And, you know, we landed on the price point, actually fairly comfortably. And I think what got us there, frankly, is that there are opportunities for consumers to get the product for less than 15 bucks, you know, across a variety of different channels. You mentioned content, and I would not be doing my job if I didn't address, arguably the

biggest conversation with streaming right now, which is the wars with the theatrical bottle. like what's happening right now. Warner Media obviously brought scoop to PVO Premium Video on Demand and it will eventually go to HBO Max. WarnerMedia made a lot of news when you guys announced a new studio, which is dedicated to kind of building these mid-tier films that will go kind of directly to Max, directly to premium video. How do you guys think about what gets the theatrical release versus what doesn't? How is that pipelining work? So a lot of people still see it as if this goes to a streaming service exclusively, it's not as good as what would end up in a theater. And although that might feel like an outdated idea, I think it's how people still picture it.

Because if it's a big movie, why wouldn't just go to the theater? But you guys are investing super hard into content for HBO Max specifically. And I'm interested in what designates like what gets the HBO Max release versus what gets a much wider theatrical release. Yeah, look, I wish I can give you a formula. The reality is like, you know, these things come down sort of on a case-by-case basis. The one thing I think it is important to sort of just, you know, to tack. at this time and with this issue in particular is that you know the COVID situation has sort of required a number of businesses to sort of rethink you know how they go to market

and how they get to consumers and I think we've we've seen the premium VOD space kind of be an outlet for you know for films seeing streaming platforms be an outlet for films but Unlike series where there is more than sort of one hour or two hour slot, films are sort of a features are sort of a one shot deal. And so it's so early in the game here to really understand the value of feature versus a series, right, in a streaming platform. But I think, you know, the options are vast at this point in time. Look, I was at DirecTV a long time ago. I ran what we called up. grade marketing at the time, which essentially is existing customer revenues. It was the Tevod store. It was a premium business. It was the live events business. And we were one of the

first at that point in time to test premium VOD. And we just opted not to progress because, you know, the math didn't work. The question is, is the math going to work now for premium VOD? At what level of investment in a film, you know, is a $500 million film? Is it viable? to sort of lean into premium VOD and or streaming for distribution, can you get enough value back versus a 30, 40, 50 million dollar film or a $10 million film? And so I can't give you specifics in and around how we as WarnerMedia are going to lean or how we as HBO Max are going to lean specifically in and around our films. We think features are important for the platform.

And so we're in an incredibly interesting period of change with respect to this topic. And I is going to be a ton of innovation and a ton of test and test and learn and a ton of trial, you know, kind of coming down the pike. And I'm fascinated by what this conversation will be in one year when we're over this challenge. And we're when we've had an opportunity to test and learn. in a meaningful way. So let me, we've only got a few minutes here. I want to zoom out. You've brought up a couple of big themes, uh, several times.

One is the idea that we're reaggregating that there's these new super platforms or super networks that are being built. Another one is just distribution. Obviously, AT&T is a big distribution network. It seems like there's a, a pretty big tension between who owns the interface of your TV service, who gets to bill you. what bundle that bill gets you, right? Like Apple, for example, we talk about this on the show all the time.

They desperately want their TV app to actually just be the interface of the Apple TV. But it's like not quite good enough. And Netflix won't give them the data or the show recommendations. You decided to do it. Like, who do you think ends up owning sort of the customer relationship? Because if I look at it with a long view, I'm paying you $15 a month and paying Netflix some money and paying Disney some money. I don't know where shows are. Like search and discovery is hard across all those things.

I'd rather just like pay it cable company, just like one amount of money and get their guide and have it be really good. Like it feels like we're just cruising right back towards that model. Yeah, look, I think there's like love this question. And too bad we only have a few minutes left. I feel like every time you've said that, what you've meant is I hate this question and I'm eager for this to be. No, look. I mean, we can talk shop about this stuff all day long. We are undoubtedly in a period of reaggregation.

Like, I know this is going to sound lame, but like you think back, you know, broadcast, few channels, then cable and satellite emerged, lots of channels, you know, which arguably were the curators more so than the aggregators. And, you know, the cable and satellite companies were the, were the mass distributors. They were the ones sort of at the tip of the spear with the consumer relationship. The internet changed that. The internet changed that in a meaningful way. And it's a gift. And, you know, it enabled what we're seeing today, which is this reaggregation of content that gets consolidated into a super network, which we call an app.

But you still got to get it to the consumer. And so the question is, is there another version of the cable distributor emerging? And what does that look like? you know, is it Comcast X1 and AT&T TV? Is it a social platform? Is it the app stores? And I think there's a, there's no, like, I can't give you an answer as to what it's going to be. But like I am incredibly excited sort of like playing in this and playing in this space

with a platform like HBO Max with a content offering like HBO Max where we can command the attention of consumers. And we can command it well. And so, look, I don't know where this is going to end up, but I really like our hand. And I think there's a way to sort of thread this needle. I mean, you look at what we're doing on the Apple TV app experience, and you can search for just about, you can search for all the content that is on HBO and HBO Max. But it plays back on the HBO Max app. that seems like a good balance where you can search and discover.

Is that a good business balance for you because they're still up in your app? Or is that the correct balance for the consumer? Because I look at that as a consumer technology critic. And I'm like, Apple's interface is designed to confuse me. Like there's a business compromise here where you want them in your app. And Apple wants to own the sort of search and discovery interface. And that means I as a user rarely know where I am, is a user, rarely know where I am, is a the Apple TV. Yeah, but look, Neely, the flip side to that is, as a consumer, you can jump into

the HBO Max app, and the ideal business and consumer, you know, sort of endpoint is that you never leave and that you never have to go watch content anywhere else, right? Yeah, but that's your ideal outcome. Like, I, there are still shows on other platforms that I'd like to watch, right? Yeah. And so we're in a place of either the consumer accepting and engaging, right with the universal search that exists or the universal or you know or the or the or the discovery app that exists on the platform or going individual apps and I think the answer for now was going to be both what this looks like in you know two three four five 10 years a bit of an unknown but again pretty fascinating sort of being in a middle of it and be in a middle of it with the platform

and an offering like HBO Max. All right. We are now, I think, fully out of time. I ask every C of this question. So I want to make sure I ask you to, it has nothing to do with any of this. When do you work? Like this is, I literally ask every C of this question, mostly because I just need the advice. How do you bracket your time so you can find time to, you know, use all your competitor apps or like write the email instead of just being in meetings holding on? Yeah, that's a, that's a exception. I work when I need to work. I have found, I have found, like as I've, as I've worked more and more years, I've found that balance and priority are really, really important. And so sort of creating a bit of a division.

And so I'll give you an example, like I have two phones, have a personal phone and I have a work phone. The idea there is to just absolutely separate email. There is a time where my work phone doesn't leave my home office and is not in my pocket where I have to completely disconnect. But for me, given that my teams are so spread out, I do tend to go later as opposed to earlier, right? So I'm in New York. You know, I tend to start my day 9, 930 as opposed to 7 in the morning because I'm going until about 8 or 9 at night just to sort of, you know, keep up with the West Coast. I have young kids. I have that I'm lucky enough still like me. The 13 and 16. I love spending time with them. And so weekends to me tend to be really, really sacred, you know,

before COVID, I was on a plane all the time. And I just made it, I made it not only a goal, but an absolute rule that, you know, I was home by Friday and I spent the weekend with my kids. And so creating space to spend time with family, I tend to go a little bit later. And I do tend to use the time that I have in the morning to really just chill, like do things that I, you know, do things that I enjoy, kind of get, just get into a good, you know, into a good mind space. That's great. All right. Well, Tony, thank you for taking all of the time. It's, it was only five. So just last question. How many subscribers do you have? We're starting, we're starting from a different place than others, anyway. I love it. All right. Thank you so

much for joining us. We'll have to have you back soon. This was a great conversation. All right. Thanks, guys. Take care. All right, my thanks to Tony Gonzalez from HBO Max. We really came at that dude. I think he did a pretty good job. Also, thanks to Julia, she did great. We'll be back on Friday at the chat show. There's obviously just a ton of news going on right now between the pandemic, the protests.

There's still tech news happening. So lots to unpack on Friday in the chat show. And then next Tuesday, we'll have another interview show and on and on it goes. We've got just an incredible slate of interviews coming up. I'm just really proud of this lineup. We're moving things around to be on top of the news, but I don't think. you're going to be disappointed. That's coming up on Tuesday. Tweet at me. I'm at Reckless. I love your feedback on the show. Love hearing who you want me to talk to, what you want me to talk about.

It is incredibly useful and I really appreciate it. I hope you're staying safe. I hope you're taking care of yourself. I hope you're expressing yourself. We'll talk to you soon.