Despite wanting to challenge Netflix in the high-stakes streaming wars, WarnerMedia CEO John Stankey said his company is trying to beat the Netflix of the future, not the Netflix of the present.
“I don’t want to re-create Netflix,” said Stankey during the Bank of America Merrill Lynch Media, Communications and Entertainment Conference in Beverly Hills on Thursday. “I don’t believe the Netflix that we know today is likely to be the Netflix of three years from today.”
What did he mean by that? “Less reliant on library content,” he explained. “I think Netflix is working very aggressively to have more content and more engagement on [content they own].”
The push to compete with Netflix reflects the streaming giant’s status as a Wall Street darling whose growth has exploded over the past few years to 130 million subscribers globally. Disney has been the most vocal legacy media company in regards to launching its own competitor, which it will do so with Disney Play towards the end of 2019. But what about AT&T, whose CEO Randall Stephenson has previously said they have major ambitions for?
“I think you’ll see us be declarative around it in the fourth quarter, for specifics,” said Stankey, though he did shed some light on what that could mean. It all starts with HBO.
“It occupies a unique position,” he said. “But that in and of itself isn’t enough in a scaled direct-to-consumer construct.” The pay cable network launched its own streaming product, HBO Now, in 2015 and has roughly 5 million subscribers.
“There needs to be other assets around that,” Stankey continued, adding that HBO is a great starting point. With AT&T getting full access to the Warner Bros. and Turner libraries, Stankey hinted the plan is to bundle all of those with HBO into one giant streaming service. “This has got to be scaled initiative.”
But with HBO, Warner Bros. and Turner each having their own distinct brands with their own distinct consumer relationships, Stankey doesn’t want them to become some homogeneous mixture. “It clearly needs to have brand distinction as a customer navigates through different types of content,” he said. “We have a great library to be able to do that.”
Speaking of HBO, Stankey reiterated plans to give the pay cable network a cash infusion without diluting the brand.
“I’m not happy that maybe only 40 percent of households engage on HBO. I aspire that that be much greater than that” he said. “We’re prepared to make the incremental investments that are accretive to the product.”
The main reason for the increased investment is to stop churn, where people cancel their HBO subscription when a “Westworld” or “Game of Thrones” are not on. “We want to invest enough in the product to ensure that No. 1 we have something for everybody throughout the year,” Stankey continued. “We believe we can do that without stressing or stretching the model.”