According to sources, AT&T’s WarnerMedia will package HBO, Cinemax, the Warner Bros. TV/movie library and original content into a streaming service priced at $16 to $17 per month. The new offering, which would be competitively priced in a crowded market of streaming services, is expected to launch in beta later this year. Currently, an HBO Now streaming subscription costs $14.99 per month and Cinemax for cable customers is priced at $12.99 per month. WarnerMedia executives are meeting to discuss the service’s name and other details of its operation.

The Wall Street Journal reports that Netflix is priced at $12.99 per month, the Disney+ service debuting in November will cost $6.99 per month, and Apple and Comcast NBCUniversal are planning to launch streaming services in, respectively, fall and 2020. Apple’s service will offer original content, and NBCUniversal’s will be ad-supported and offer original and library content. The latter will “be free to its roughly 54 million pay-TV subscribers, as well as subscribers of other U.S. pay-TV providers,” but not available to cord-cutters.

Other competition comes from skinny bundles, “low-price online cable-TV packages … such as Dish Network’s Sling TV and Google’s YouTube TV.” A Magid Research survey showed that people who cut the cable cord “are willing to pay for about six different services that cost a total of about $38.”

WarnerMedia’s announcement marks a shift in strategy. The company’s chief executive John Stankey first revealed a “three-tiered platform that included an entry-level option focused on movies, a second tier with original programming and blockbusters, and a third one with Warner Bros. content.”

“The idea of three tiers never made much sense and is too complicated to fly in the marketplace,” said MoffettNathanson analyst Craig Moffett, who recently spoke with Stankey and revealed that “AT&T was headed toward a single tier, with the goal of being in the middle of Netflix and a combination of Disney+ … and Hulu (at $11.99).” WarnerMedia may also launch an ad-supported, lower-cost version of the service “later in 2020,” said sources, as well as “an additional premium option for people to watch live events or sports.”

To launch its service, WarnerMedia must conduct “complex discussions with cable partners like Comcast and Charter Communications … who will likely not want to get undercut on their pricing of HBO.” One source said, “WarnerMedia is prepared to work with those distributors in a number of ways … [which] could include the cable providers marketing the streaming service and taking a cut of revenue, or having flexibility to lower their HBO price to match the implied lower price of HBO in the WarnerMedia streaming service.”

Related:
Warner Bros. on ‘Precipice of Change’ as Studio Preps for WarnerMedia Boot Camp, Variety, 6/8/19
AT&T, Dish Are Open to Merging Satellite-TV Divisions, Bloomberg, 6/7/19