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Disney+ Has a Value Problem That HBO Max Doesn't, and Nobody Cares

By James Brumley - Apr 19, 2021 at 7:43AM

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HBO Max offers subscribers the most bang for their buck. Yet it's the streaming service consumers are least interested in. Something needs to change.

Most of the time, consumers find the optimal way of spending their money. Crowdsourcing has lots of success stories. This is not one of those times.

On a dollar-for-dollar basis, HBO Max from AT&T (T -0.66%) is a far better value than Walt Disney's (DIS 1.08%) Disney+. Yet Disney+ has amassed more than 100 million subscribers since its launch in November of 2019, while HBO Max boasts a considerably more modest 17.1 million activations since its May 2020 debut through the end of last year (bear in mind many of those "activations" came from consumers not paying anything for the service).

What gives? Certainly pricing plays a partial role. For those paying for it, HBO Max's cost of $14.99 per month is nearly twice the monthly price of $7.99 per month for Disney+.

As was noted, though, viewers are still getting far more bang for their buck with HBO Max. They arguably should have figured this out by now. The more plausible explanations, then, are that the Disney brand name just has more appeal and that AT&T's Warner Media arm hasn't adequately explained to customers its value proposition.

Young man shrugging, unconcerned.

Image source: Getty Images.

Dollar for dollar, HBO Max is better

Fintech company Self gathered the data and crunched the numbers. Taking the hours of programs and movies available via major streaming platforms and then cross-referencing that content with IMDb (International Movie Database) ratings, Self determined that -- no surprise here -- Netflix (NFLX 3.29%) is still the world's best streaming value. It's got more video content than any other subscription-based on-demand video platform, and at its average monthly price of around $13 (depending on the package), Netflix just offers more shows and films per dollar than any of its rivals.

What's interesting is the name that securely holds the No. 2 spot.

For movies, HBO Max's 135.6 films per dollar may be a distant second, but No. 3 Disney+ is in a distant third place with just under 80 films.

Self Financial data says HBO Max is the second-best value for movie fans, behind Netflix.

Image source: Self Financial Inc.

As for television shows, Amazon's (AMZN 3.60%) Prime offers 72.2 shows per dollar, well below Netflix's 278, and just a hair above HBO Max's 69.6. Disney+ ranks fourth on this front, with just 59 television programs per dollar, per month.

Self Financial reports HBO Max and Amazon Prime are both better values than Disney+ in terms of television shows.

Image source: Self Financial Inc.

And lest you think consumers are choosing Disney+ over HBO Max for the quality of its content or its suitability for children, think again. HBO Max offers more kid-friendly content than any other platform and higher IMDb-rated programming (on average) than Disney+. People just don't seem to care.

Four takeaways 

There are four key ideas to glean from Self's findings.

1. The name matters. For the appeal of Disney+, we can largely credit the Disney name and the few splashy hits at its disposal. Its Star Wars and Marvel franchises are powerful draws, though even without them it's not a stretch to say the Disney name itself carries a lot of weight. The media giant didn't need to make a hard sales pitch to prospective subscribers. It just had to attach the Disney name to the service.

2. The value proposition has to be made sometime. That's not the case for AT&T's young on-demand video platform. While known and respected, HBO isn't quite the lifestyle brand Walt Disney is. As such, AT&T arguably still needs to explicitly explain why HBO Max is worth a streaming industry-high of $14.99 per month.

That's easier said than done. Selling a new on-demand video platform requires a lot of marketing that prompts an authentic, emotionally charged response in a relatively cluttered arena. It also has to happen faster than usual. A careful look at AT&T's HBO Max video adds reveals that a huge portion of them are 15-second spots, with the company opting for a higher frequency of shorter commercials. That too makes it tough to make a numbers-based value case.

3. The price point is a big hurdle, regardless of value. Even with the value that HBO Max brings to the table at its above-average price of $14.99 per month, perhaps the sight of the big number is a hangup for the cost-conscious consumer. It's arguable that cutting HBO Max's price in half, for instance, would more than double the number of consumers paying for the service.

4. Disney may hit a price/value wall soon enough. Finally, while viewers have been tolerant of the modest overall value for the money they're spending on Disney+ (or the Disney+/Hulu/ESPN+ combo), Self's data calls into question just how much pricing power Disney actually has on the streaming front.

The recent Disney+ price increase to $7.99 per month still leaves it at relatively modest levels. But with 20 original Marvel and Star Wars series on the radar plus another 30 live-action series or films planned for the foreseeable future, profits for Disney's already-unprofitable streaming arm are sure to be pressured. Consumers just might balk, unless Disney also demonstrates more relative value than it does now at an absolute price point people can live with.

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Stocks Mentioned

AT&T Inc. Stock Quote
AT&T Inc.
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Apple Inc. Stock Quote
Apple Inc.
$141.56 (1.89%) $2.63
The Walt Disney Company Stock Quote
The Walt Disney Company
$97.18 (1.08%) $1.04
Netflix, Inc. Stock Quote
Netflix, Inc.
$185.88 (3.29%) $5.93, Inc. Stock Quote, Inc.
$113.50 (3.60%) $3.94

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