AT&T (NYSE:T) hasn't even launched HBO Max, but it's already built a long-term vision for what the forthcoming streaming service will be. The new service will go head to head with Netflix (NASDAQ:NFLX), Disney's (NYSE:DIS) trio of streaming options, Amazon's (NASDAQ:AMZN) Prime Video, and Apple's (NASDAQ:AAPL) Apple TV+.

Comments from AT&T's management suggests it wants HBO Max to eventually be a combination of all of those services -- a Swiss Army knife of streaming video, if you will.

John Stankey standing on a stage in front of the HBO Max logo

WarnerMedia chief John Stankey presenting HBO Max. Image source: AT&T.

A premium streaming service with prestige content

When HBO Max launches in April, it'll be just one thing: a premium streaming service, most akin to Netflix. 

HBO already has a big audience, and the goal with HBO Max is to broaden that audience, potentially to the same level as Netflix. AT&T expects to add 16 million incremental subscribers to its current HBO subscriber base to reach 50 million U.S. subscribers total by 2025. That's only slightly behind where Netflix is today.

A premium streaming service is very "on brand" for HBO. It wins dozens of Emmy nominations every year, and its name is practically synonymous with the best in television. If the content produced exclusively for HBO Max can achieve the same level of quality as HBO, it could help more consumers justify the monthly $14.99 price.

An ad-supported streaming service

At its investor day last month, AT&T revealed plans to offer an ad-supported tier for HBO Max starting in 2021. Subscribers will get a discount on the monthly price in exchange for sitting through ads. This models Hulu's hybrid pricing, and AT&T expects more consumers will pay the lower price.

AT&T is building out its Xandr advertising platform to support more video advertising through its various distribution channels. Additionally, AT&T already sells a lot of advertising for its pay-TV business. It's much easier for AT&T, with its existing operations, to offer an ad-supported tier for its streaming service than a company like Netflix, which has no experience selling ads or existing ad technology.

However, including ads in the middle of HBO programs (which are programmed without natural ad breaks) might dilute the premium brand HBO has built over the last 40 years. Hulu's model works because it focuses on next-day streaming of shows that originally air on broadcast or basic cable TV. When subscribers stream a feature film on Hulu, though, they don't see advertisements in the middle of the movie. Balancing advertising with its premium content could be a challenge for HBO Max.

A place to watch live TV

At some point, AT&T also wants to include live television programming within the HBO Max platform. In fact, management sees HBO Max and AT&T TV -- its forthcoming thin-client TV service -- merging into a single product. The first step is to get them both running on the same streaming platform, and then they can combine the two services.

Hulu offers a live TV service. It's actually the leading virtual pay-TV provider, surpassing AT&T's service last year and rising to the top of the heap in the third quarter. It's had a lot of success attracting subscribers thanks to its ad-supported on-demand service, and it's been able to produce better margins thanks to its on-demand library replicating DVR content.

Putting HBO Max at the center of a new live TV cable bundle doesn't really make sense for AT&T. It can achieve the same benefits of scaling its streaming technology platform without combining the two products.

A streaming content aggregator

Lastly, WarnerMedia chief John Stankey revealed his expectations that HBO Max will become a platform to bundle together other streaming services during a recent Recode conference. It seems inevitable some company will start offering bundles of streaming services, but AT&T might not be the company to do it. 

Hulu currently offers add-on options including HBO, Cinemax, Showtime, and Starz. AT&T may see an opportunity to offer something similar.

But Apple and Amazon are much better positioned to bundle streaming services together through their respective Channels platforms. In fact, attracting consumers to Apple TV Channels appears to be a key piece of Apple's strategy with Apple TV+. Amazon Prime is a clear leader in the space already, and the combined popularity of Prime and Fire TV means it'll stay a prominent force in over-the-top distribution for some time. 

AT&T can't keep things simple

If there's one thing that's made Netflix a success, it's sticking to one thing and doing it extremely well. Hulu succeeded thanks to its access to timely content, and it saw an opportunity to leverage that content access into a live TV streaming service. Amazon Channels is a success because it has access to a big streaming audience, payment information, and a distribution platform in Fire TV. Apple TV Channels has a similar opportunity, and Apple designed Apple TV+ to push people to its Channels platform.

AT&T might want to do everything its competitors are doing, but there's nothing that gives it an edge in any of those ancillary businesses. Offering ad-supported streaming could hurt its brand. Offering live TV in HBO Max muddles the offering as well. And consumers have no reason to stay in HBO Max's platform to bundle other streaming services when Amazon and Apple could do a much better job of it. 

AT&T could end up sinking a lot of money into HBO Max to pursue additional opportunities, but that money may be better spent producing more great content for its viewers. AT&T needs justify its high price, and the best way to do that is to offer the best content possible. Trying to do too much could put it behind the competition in the long run.