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HBO Max Joins Multi-Billion-Dollar Content Battle
Sky and Netflix also announce moves to double down on original spend for pay TV and direct-to-consumer services
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WarnerMedia's announced that its premium direct-to-consumer (DTC) service will be called HBO Max when it debuts next spring, but will it have the content to attract and retain subscribers?

That's the multi-billion-dollar question facing not just WarnerMedia parent company AT&T but media conglomerates Comcast and Disney as they seek to face down Netflix and pending streaming competition from AppleQuibi, and more.

Unlike those two newbies, HBO Max will have huge franchise brand recognition and a 10,000-hour content catalogue from day one.

It has repatriated, at vast expense (reckoned to be north of $400m for a five year deal) ,all 230+ episodes of Warner Bros' TV produced sitcom Friends, will presumably offer every season of Game of Thrones and GoT's fantasy-epic sequels, and has also lined up seven original series including Dune from director Denis Villeneuve and romantic comedies from Reese Witherspoon while DC Universe spin-offs like Batwoman will also be available.

WarnerMedia has not yet announced pricing for HBO Max, which is expected to be more than HBO Now ($15 per month) so as not to undermine its existing standalone OTT service. The HBO Max library will be larger though.

Apple, which is projected to spend $5bn on content between now and 2022, has stressed that its strategy is one of quality not quantity. That's more of a default position, given its standing start as a content producer.

Meanwhile, Netflix and Comcast-owned Sky have announced fresh initiatives to double down on content produced out of Europe.

Netflix has taken a reported 10-year lease on space at the renowned Pinewood Shepperton Studios which, together with an existing production hub in Madrid, will see it both capitalise on UK and European tax breaks and meet European Union criteria for streaming a percentage of content produced locally.

The streamer has 153 originals on its slate from European producers this year, double that of 2018, and 221 productions in total from a European budget of $1 billion and a total spend this year of $12 billion.

It's worth noting that Warner already has major permanent production space north of London, at Leavesden Studios.

Sky plans to double its investment on original content to $1.3 billion over the next few years, and will produce it under the banner of Sky Studios.

"This is a transformational development for us," said Sky Group chief executive Jeremy Darroch in a press release. "Sky Studios will drive our vision to be the leading force in European content development and production."

Sky's strategy is strengthened by the backing of Comcast/NBCUniversal, with potential international re-sale revenues on the table from non-Sky markets.

"Netflix and Sky have both grown their reputation in original content in recent years, and recent announcements regarding further investments prove how central this content is to their overall strategy in the coming years," says David Sidebottom, principal analyst, Futuresource Consulting. "In addition, both continue to focus on improving user experiences, providing an attractive proposition for consumers and helping manage subscriber churn."

"Sky is positioning itself as a European production powerhouse," according to Richard Cooper, research director at Ampere Analysis. "The Disney-Fox merger and Comcast's [$39 billion] acquisition of Sky have been brought about by competition from streaming giants Netflix and Amazon, permanently changing once-established audience viewing dynamics." 

A significant proportion of investment to date in the new "golden age of TV" has been in scripted content, particularly from Netflix. But, as Sidebottom points out, non-scripted, typically scheduled content like Love Island, Britain's Got Talentand talk shows "remain hugely relevant and critical for local broadcasters."

He argues, "This [type of content] is less represented on global streaming services, including Sky. In addition, the sports rights battleground will be re-defined, another area where major rights are typically localised and have been key to the success of pay TV operators such as Sky to date."

All of these hugely expensive strategies could backfire—and surely will for one or more—if viewer fatigue takes hold. While U.S. residents are on average willing to pay for about 3 SVOD packages per household, the proliferation of DTC services will impact consumer choice and what they can afford.

New services may entice consumers with free trials and aggressive introductory prices, but the long-term success of these services will depend more on customer retention than acquisition, and that requires a strategic mix of technology, marketing, and the right content to satisfy the consumer experience.

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