WarnerMedia Streaming to Use Two-Sided Model

WarnerMedia will be the latest company to enter the streaming service game, and it looks like they're going for a pretty accessible approach.

During AT&T's quarterly earnings call, CEO Randall Stephenson spoke about the upcoming streaming service, which is expected to launch by the end of 2019. As Stephenson revealed, the service will utilize the company's Xandr ad technology unit to create several different options for potential users.

"Our model will be a two-sided model, with a heavy subscription service but some ad-supported elements as well," Stephenson revealed.

WarnerMedia's streaming service was previously announced in October of last year, although details have been relatively mum in the months since. As Deadline outlines, the service is expected to have three tiers, and incorporate some content from HBO. According to Stephenson, having such a rich library of content to draw from will allow some flexibility with the different tiers.

"We are strong believers in what [WarnerMedia chief] John Stankey likes to call 'two-sided business models,'" Stephenson went on to explain. "Subscription, commercial-free elements like HBO and like Netflix, there's a demand and customers have become accustomed to advertising-free subscription services. And we think HBO and a lot of the Warner Bros content, that's really premium content, will fit into that mold."

"There are other elements where advertising-supported models are going to be important to keep prices down, to keep costs for the consumer down and to actually fund additional content acquisition and purchasing. Xandr is a big part of making that model work."

When the WarnerMedia streaming service launches, it will join a pretty stacked roster of platforms, including icons like Hulu and Netflix, as well as newer offerings like DC Universe, CBS All Access, and Disney+. But it sounds like Stephenson has an idea of what essentially sets the WarnerMedia service apart.

"[The heritage] is a really important thing," Stephenson emphasized. "When you look out at the landscape in terms of what is being consumed on a lot of the other aggregators of streaming products, you'd be surprised how much of that is Warner Bros intellectual property. So we're going to be making some decisions over the next two to three years in terms of which properties to bring in and which to license on a non-exclusive basis."

"We have really high expectations for our streaming service. We don't think there's going to be a proliferation of these that will succeed over time," Stephenson said.