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HBO Max's Andy Forssell Says Ad-Supported Streaming Could Help Push TV Universe Past 100 Million Homes

Andy Forssell
(Image credit: WarnerMedia)

With the ad-supported version of its HBO Max product only a few days old, HBO Max executive VP and general manager Andy Forssell told an industry audience that the product and others like it could open up a whole new market for streaming, and eventually help to push the TV universe past 100 million homes. 

WarnerMedia launched its ad-supported version of HBO Max on June 2, priced at $9.99 per month and geared toward more cost-conscious consumers.  At the Barclays virtual Future of Media conference Thursday, Forssell said that the potential for ad-supported streaming is huge.   

“You’re going to get to a larger market. The total addressable market is larger,” Forssell said. “Netflix is probably defining the ceiling on what full penetration in the U.S. market is and they’re riding that up and in some cases they are propelling that wave. I think with ad supported, you add 20% to that."

Currently there are about 85 million pay TV customers in the U.S., but Forssell predicted ad-supported streaming could help push that total higher. 

“We should get back to [the] 100 million-plus homes that we served during the heyday of cable,” he continued. “I think SVOD and some ad-supported SVOD versions should get back to that.”

HBO Max said that it will keep ad loads low on the service -- a maximum of 4 minutes per hour -- and Forssell said that won’t change. 

“Our hypothesis there is message recall, brand recall will be higher the fewer ads you have,” Forssell said. “They’ll be worth more and we'll get to monetize that, ad partners will agree that they are worth more. That’s the experiment we have to prove out in the next year and make it reality and not flip back into what many providers have done in maybe starting with a similar thesis, but saying let’s add another ad to this break because that's the easiest way to increase revenue.”  

Forssell also talked about sports rights, adding that the old way of selling sports rights -- offering what he called “odd little slices” of rights to cable networks -- probably won’t work in a streaming world. 

“I don’t think that [sports] rights landscape is going to be nearly as successful in SVOD,” he said. 

He pointed to Turner Networks’ agreement with the National Hockey League, which also has an HBO Max component.

“Hockey primarily was a vote of confidence and investment in the Turner Networks,” Forssell said. “To add a major sport there was a statement we wanted to make. Will we experiment with that on HBO Max? Sure.” 

But he added that sports brings new challenges to streaming, especially on how they are presented. Providers should also be thinking about things like shoulder programming around games, and whether talent connected with that content should be different in the digital and linear worlds. 

For news operations like CNN, he said the linear relationship will continue as the company looks for streaming complements. 

CNN is said to be readying a streaming service called CNN Plus, according to a report in the Wall Street Journal. 

“We will look at what you can do direct-to-consumer,” Forssell said. “We don’t think it’s just repurposing all of that and putting it online in some IP directed format. We think it’s going to change, some of the content needs to change. There is a lot of work going on as to what that will look like.”

Still, Forssell said he was optimistic about the fit between streaming news and entertainment. “They [have] different needs, but I’m optimistic," he said. “Sports, I’m not pessimistic, but it’s going to take some experimentation on what works in SVOD, because what works in cable doesn’t necessarily translate.” 

Mike Farrell is senior content producer, finance for Multichannel News/B+C, covering finance, operations and M&A at cable operators and networks across the industry. He joined Multichannel News in September 1998 and has written about major deals and top players in the business ever since. He also writes the On The Money blog, offering deeper dives into a wide variety of topics including, retransmission consent, regional sports networks,and streaming video. In 2015 he won the Jesse H. Neal Award for Best Profile, an in-depth look at the Syfy Network’s Sharknado franchise and its impact on the industry.