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Research Details

Over the Top: The Rise of Streaming and the TV Industry Value Chain

Abstract

On May 27, 2020, WarnerMedia launched its own streaming video service to compete with Netflix. The new app, called HBO Max, would attract subscribers with its deep library of iconic, exclusive content, such as the beloved TV series Friends. The app's name, leveraging the prestige American cable channel HBO, would feel both familiar and prestigious to consumers, signaling premium quality (and ideally justifying the $15-per-month fee). Furthermore, the ability to leverage AT&T's wireless and cable network would provide the streaming app with different types of access to consumers than was available with competitors such as Netflix, Hulu, and Amazon. And although no one at WarnerMedia had expected a global pandemic when the company first announced plans for HBO Max back in 2018, COVID-19 quarantining would surely drive even more interest for streamed entertainment at home.

That was the plan: unique blue-chip content, wrapped in a trustworthy brand and streamed directly to customers through the internet. This "over the top" digital distribution--so called because it skipped "over" the cable, satellite, and broadcast platforms that traditionally delivered televised content to viewers--had already been employed by Disney when that company launched its own streaming app, Disney+, in late 2019. But by early December 2020, it was clear this delivery mode wasn't working for WarnerMedia. Within six months of its launch, Disney+ had netted 54.5 million subscribers; in the same amount of time, HBO Max garnered just 12.6 million.

WarnerMedia's challenges with HBO Max illustrate only part of a highly complex, big-money, and continuingly evolving set of questions running through the TV production/distribution value chain, in particular: Which entities actually create value, and how can they capture value appropriately?

Type

Case

Author(s)

Craig Garthwaite, Amanda Starc, John Pavlus

Date Published

09/03/2021

Discipline

Strategy

Citations

Garthwaite, Craig, Amanda Starc, and John Pavlus. Over the Top: The Rise of Streaming and the TV Industry Value Chain. Case 5-321-510.

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