HBO Max International’s Johannes Larcher

Powered by its stable of iconic brands—including HBO, DC, Cartoon Network and Warner Bros. blockbuster films—and high-profile originals, HBO Max has been steadily building its global presence since launching in the U.S. in May 2020, smack in the middle of the early days of the pandemic. By 2025, WarnerMedia is looking to reach between 120 million and 150 million subscribers with HBO and HBO Max worldwide. For Johannes Larcher, the head of HBO Max International, signs are already looking good that the company will reach those benchmarks. As Larcher tells World Screen in this wide-ranging interview, HBO Max is also laser-focused on continuing to improve its service, determining the best pricing models for each territory and coming up with innovative marketing to power HBO Max into the top three SVOD models globally.

WS: Let’s start with the Latin American rollout. What have been some of the lessons from that launch?
LARCHER: We launched HBO Max in LatAm in the middle of last year, on June 29. We had HBO GO as a service there before, but it was limited in content, functionality and product features. Now that we have brought our flagship streaming service to the region, the demand for our content has been quite astonishing. Another [lesson] has been that local content choices matter greatly. The choices we have made are connecting very well with our audiences in Latin America. That includes Días de Gallos, an Argentinian rap-battle show that was very successful with young adults, and Bake Off in Mexico, [El Gran Pastelero]. An experiment we’re doing in Brazil and Mexico around live soccer is working. That’s a big investment. We are the exclusive home of the UEFA Champions League, and we have some regional cup games in Brazil. The live sports content has been acquisitive and engaging.

The most important [lesson], though, has nothing to do with content. It’s really about how we take our service to local audiences. Tailoring our service to the needs of the local audience is key for us to win globally. What does that mean? I’m talking about offering service levels that are tailored to each market. In Latin America, we launched a standard monthly plan and offer a mobile-only tier that has been quite successful. We did that because we realized that there’s a big opportunity to serve a large percentage of the population who only access the internet on their mobile devices in Latin America. Our pricing strategy has proven to be valuable and effective. We priced for value and penetration into the market. That has been well received by Latin American audiences. We also introduced a promotional offer when we launched that some saw as very aggressive. In the first month after launch, you would get our standard monthly plan at 50 percent off for life if you subscribed during that period. That has created a cohort of super loyal subscribers—we call them the churn busters because they stick with the offer; they don’t want to lose that benefit. All of that has worked together very well. I couldn’t be more pleased with how LatAm has started to develop.

WS: How is the European rollout progressing?
LARCHER: The initial step was into the Nordics and Spain in October. We launched in 15 new markets on March 8. For the first time, this includes a market where we’ve never operated an OTT streaming service—the Netherlands. We’re launching in Eastern Europe and Portugal, where we’ve had our DTC streaming for many years. By the end of the year, we’ll be in 27 countries in Europe, including Turkey, Greece and some others. We’re very pleased with how it’s gone. It’s important to say that HBO Nordic and HBO España were successful over-the-top services in their own right. However, we’ve brought Max to the market, and that means more content, a fully deployed service that is available on all platforms and that the experience for the consumer is now competitive, with all the key features available, such as user profiles, personalization, recommendations and continue watching. We’ve stepped up the offer we’re making to the consumer. We brought the pay-one window to Europe for the first time with [Warner Bros. movies made available] 45 days [after the theatrical release]. We were an HBO-focused service, and now we have Warner Bros. and DC and Cartoon Network. The content offer is much better, it’s available on all the platforms, and the experience is better. We are extremely encouraged. We grew internationally last year by almost 8 million paid subscribers, and we only started in the middle of the year. We ended the year at 27 million subs ex-U.S., which is ahead of our expectations. We’ve announced our aspiration to be somewhere between 120 million and 150 million subscribers worldwide by 2025. Most of that growth has to come from outside the U.S. I’m pleased to say that the initial signs and steps have been successful and affirmed we have a path to get there.

WS: Have there been advantages for HBO Max being a newer player on the SVOD streaming landscape?
LARCHER: I’ll talk about my experience launching Hulu in Japan 11 years ago. The challenge there was establishing not only Hulu as a brand and a service but the entire category. No one understood what SVOD meant, what streaming was. It was all about building the foundation. Now, all of this is clear. We don’t have to do the heavy lifting of establishing the category for the consumer. Another advantage is that growth marketing and the science of it have come a long way since I was at Hulu. We are so much more sophisticated today in how we attract subscribers, engage them and retain them. Many tools and models are available today that didn’t exist back then. The talent pool has gotten much richer. We are also massive believers here at Max in the importance of constantly testing and iterating. We have seen other players make several mistakes when they were expanding internationally. We have the luxury of not having to repeat that. For example, we now know how to think about local content and originals and how to produce them and create them overseas. We’ve learned a lot from what others have already done.

WS: Not much has been said publicly about the Asia rollout plans. What can you tell me about the strategy for that part of the world?
LARCHER: Asia is incredibly important to us. We will not get to our goal of 190 countries without being in Asia. We have HBO GO in seven countries in Southeast Asia, so we already have a successful streaming service in the market. It’s been low investment, low focus. It started as a TV Everywhere product for our affiliate partners, but it also has an over-the-top direct-to-consumer component. And it’s been going well. We are looking very carefully at when to launch HBO Max in Southeast Asia. We have leadership in place. Jason Monteiro joined us, based in Singapore, [as general manager for HBO Max in Southeast Asia, Hong Kong and Taiwan]. It’s fair to say we are neck-deep in planning our moves in Southeast Asia. I can’t give you a date yet, but we are keenly interested in bringing Max to our fans there. As for the rest of Asia, there are billions of consumers to serve in that part of the world. We will bring HBO Max to them as a direct-to-consumer service, just like we’ll bring it everywhere else we’re allowed to go, except for China and Iran and a few other places! We are well on track. We will be in Asia, and we are laying the foundation as we speak.

WS: You mentioned sports in Latin America. Is that something you’ll pursue in Europe? I know the costs for sports rights, especially in Europe, can be challenging.
LARCHER: I would never say never. We are very encouraged by what sports has done for us in Latin America. It helps us acquire new customers, a new segment of the audience. It is super engaging. Our concurrent streams are through the roof when Champions League is playing. We’re seeing real opportunity there. We were able to make the economic model work partially because we, as WarnerMedia, are not only HBO Max but also have linear channels in the market. In Europe, the rights situation is extremely competitive. I would not preclude us from exploring this. When the Discovery merger is behind us, [you may see us] taking an aggressive strategy and approach to sports in Europe. We went into this in Latin America as an experiment. An expensive experiment! But everything we’ve seen so far has validated the thesis that this could work for us. We’re open-minded about looking at similar opportunities elsewhere.

WS: There is an ad-supported subscription tier in the U.S. Is that something you’re exploring internationally?
LARCHER: In the U.S., we have an AVOD tier that allows us to offer HBO Max as a service with a price level that is more affordable. Our cost for the SVOD subscription ($15 a month) is at the high end. With AVOD, we successfully brought our service into the reach of more consumers in the United States. If you look at our pricing strategy overseas, we have more flexibility. Our price points are more reasonable and put our service in the reach of more consumers. In Latin America, our basic entry-level price point is around $3 for the mobile-only tier. We don’t need to make the service more affordable in most of our international markets. The willingness of consumers to pay for content and consume advertising at the same time is uniquely strong in the United States. In many countries, you see a lot of resistance. On top of that, you put issues around rights—having the ability to include content in an AVOD service—and challenges in how you successfully sell advertising and service advertisers. We are evaluating, but we haven’t found a need so far in any of the markets we’ve launched in.

WS: Let’s talk more about the content lineup. How important are local originals and third-party acquisitions?
LARCHER: Our goal is to offer a service that is relevant for people in that country. We do not want to be a U.S. export business only. As great as our content is from the U.S., as much as it is the foundation of everything we do globally, it is important for the service to be from the market, for the market. Inevitably, it leads you to evaluate original content creation, at least in the bigger territories. We’ve produced original content successfully for years in Latin America, Europe, Southeast Asia and Japan. We’ve been in this business as WarnerMedia for a long time. We’ve announced that we’re significantly stepping up our investment in originals in Latin America. We’re doing the same in Europe. We’re [making] original content in Turkey, which travels very well in certain parts of the world. Our commitment is to find stories and invest in projects that resonate locally. The goal with these original stories is to be successful in the country of origin first and foremost. We’re not trying to create global hits. The goal is to be relevant to the local audience—if we succeed regionally or, better still, globally, that’s great. We are making this happen organically, focusing on the local customer and the quality of original stories from the country of origin first. We’ve created some amazing shows. Patria from Spain was nominated for an International Emmy. There’s Kamikaze, a young-adult show from Denmark that did well. In Latin America, we have Las Bravas coming up; it’s a really fun show out of Mexico about a female soccer team. We have The Thaw, a crime thriller drama out of Poland. It’s very gritty and compelling, almost like a Nordic noir. 30 Coins from Spain did well in Spain and the United States. We work closely with Gerhard Zeiler [president of WarnerMedia International] and his team on creating those originals.

As for third-party acquisitions, our goal remains the same: to bring the very best content at the best price to audiences worldwide. As we start to produce more content at WarnerMedia—we’re spending some $18 billion on content this year—more and more is being held back for our own service. As that happens, our need to buy on the open market lessens, naturally. That said, we have some very strong relationships in place with third-party suppliers. We have a relationship with Sony in Latin America for pay-one movies and NBCUniversal in Asia. We also have local and regional partners we license from. So third parties still matter. But increasingly, the need for third-party content will lessen as more and more of our great content comes out of our own factory.

WS: How important is that 45-day pay-one window as a subscriber acquisition tool? Do you see spikes after releasing a big blockbuster tentpole?
LARCHER: In Latin America and Europe, we’ve seen that, yes, it is acquisitive. We’ve had great success acquiring customers who stay with us for very long periods of time through the pay-one movies we bring to the service. There’s also this notion that HBO Max is the home of wonderful movies coming every few weeks. This year, we have a slate of 12 movies that Warner Bros. produces that are direct to Max. They include amazing titles like Father of the Bride. There is a brand perception that we have a constant flow of wonderful movies coming to the service, especially in areas we also license from third-party studios. That has been working, both for acquisitions and for retention.

WS: As you look ahead at the next 12 to 18 months, what are your priorities for HBO Max?
LARCHER: I have four things at the top of my radar. First of all, continuing to expand our global footprint by launching in more countries. I’ve shared with you what we’re doing in 2022, which is the 21 additional European countries we’re launching in, plus we’re working hard on Asia. In 2023 and 2024, that continues. In 2023, we hope to have an opportunity to add France to the mix. That’s a possibility.

Inside our launched countries, there’s a lot to do. We have to increase our marketing sophistication. We’re in the first inning of a very long game. We’ve done very well. We’re very happy. But there are plenty of opportunities to be smarter and more effective and efficient marketers of our service. We need to continue to experiment and invest in local content and find a way for that content to reliably connect with large audiences. We need to continue to improve our product and technology. We have a very credible service, but we have opportunities to make it more intuitive, more enjoyable, more relevant for our customers. And then maintaining and growing our team.

From an aspiration standpoint, the priority is on firmly becoming one of the top-three must-have streaming services in every country we’re in. We have achieved that in Latin America. We have achieved it in the Nordics and Spain. We need to make sure that HBO Max is top of mind when consumers think, I want to watch a great movie or a great show. And we look forward to being in a position to combine our efforts with Discovery and fully leverage our respective capabilities and strengths. Both companies bring a lot. Combined, we’ll be even stronger. A focus this year will be making sure that combination, when it happens, goes well.