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Image: WarnerMedia

How WarnerMedia designed its cheaper HBO Max plan

How WarnerMedia designed its cheaper HBO Max plan

Good morning, and welcome to Protocol Next Up. This week: a closer look at the decisions behind the new HBO Max plan and the slow growth of iPhone lidar scanning.

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The Big Story

HBO Max with ads is not about the upsell

HBO Max with ads is here: WarnerMedia launched a new $9.99 HBO Max plan Wednesday, while also rolling out new yearly billing options for people who want to save even more ($99.99/year for HBO Max with ads, $149.99/year for the ad-free plan).

The plan itself was no surprise — WarnerMedia executives had been talking about it for some time, and CEO Jason Kilar was a big proponent of ads back when he led Hulu — but key differences between the two plans hadn't been previously announced. I caught up with WarnerMedia VP Julian Franco, who leads the product development of the ad-supported tier, to learn how the company ultimately decided on what exactly $9.99 per month will get you.

  • The main deciding factor is time, Franco told me. HBO Max will give people a simple choice: Are you willing to watch up to four minutes of commercials per hour, or do you want to spend more to save some time? "We wanted to simplify the choice for the customer," Franco said.
  • The ad-supported tier won't have 4K, but that wasn't a decision to make the $14.99 plan look more valuable. Instead, it's "more of a byproduct of the marketplace," as Franco put it: Ads are generally in HD, so when a video plays in 4K, the ad break would have to load a separate video player with a lower-resolution commercial. "The experience would be less than desirable for the customer," Franco said. And marketers probably wouldn't be too happy, either, if their ads looked a lot worse than the content they're buying against.
  • The cheaper plan won't have downloads, but Franco again blamed that on technical issues rather than marketing considerations. Downloading ad-supported content "is a bit more challenging to pull off," he told me. One example: If a fast food chain markets a limited-edition sandwich, and you download the ad before embarking on a vacation, it may already be outdated by the time you finally watch it.
  • HBO content won't have ads on either plan. That's to protect the HBO brand, which has been associated with ad-free viewing since its launch 40-some years ago. "It creates some complexity," Franco admitted.
  • The ad-supported plan won't get WarnerMedia's new movies, but don't expect to feel too left out: Anyone who signed up for the $9.99 plan will find titles like "The Suicide Squad" if they search for them, but the service won't actively push them, or any of the other differences between the two tiers, as an upsell. "We never want to judge the customer," Franco said.

Not making your customers feel bad if they opt for the cheaper tier sends an interesting message, and it's different from the way Spotify or NBCUniversal's Peacock approach advertising. Whereas those services see ads as part of a funnel that ultimately gets people to sign up for the premium experience, WarnerMedia seems content just presenting the two plans as different options. "You'll see us just market HBO Max," Franco said.

In a way, that's very much like Hulu, which has an ad-free tier but doesn't actually spend a whole lot of effort marketing it — and for good reason: The Disney-owned service now makes just as much money per customer with its ad-supported tier, even including discounts, as it does with its ad-free tier.

Franco said that the ad-supported tier, and the service's capability to support multiple plans (which he called, in true industry speak, a "multi-tenant platform"), will also help HBO Max with its international expansion. The service is scheduled to launch in Latin America at the end of June.

Overheard

"You're talking about tens of billions of dollars of revenue … this is not like the budget line for printer toner at Apple." —Spotify Chief Legal Officer Horacio Gutierrez calls BS on Apple executives telling the court in the Epic lawsuit that they don't know how much money the App Store makes.

"I had something like this as my screensaver in 1998. It rotated or twisted and moved around the screen." —Twitter user William Li responds to the new Warner Bros. Discovery logo.

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Watch Out

iPhone's lidar scanning is off to a slow start

It's been eight months since the introduction of Apple's iPhone 12 Pro, and we've yet to see massive growth of the kind of 3D asset-scanning enabled by the device's lidar sensor. That's according to Sketchfab's CEO Alban Denoyel, whose company aims to be a kind of Vimeo for 3D assets. Denoyel has been tracking the space closely, and also has been using the phone to capture and publish a scan every day.

iPhone scans accounted for around 5% of all the 3D objects uploaded to Sketchfab, Denoyel told Protocol in December. That seemed huge two months after the introduction of the device, but things haven't changed much since. "Unfortunately, this hasn't grown much," he told me this week. "3D capture is novel and not something everyday people have a use or habit for."

Apple hasn't promoted the feature much at all, Denoyel also noted. "To my knowledge, no lidar capture app has been featured in the App Store yet," he said.

The development of scanning apps is one area that the iPhone 12 did accelerate, however. Lidar scanning, which captures the depth and surface area information of environments to re-create them in 3D, isn't yet natively available in the iOS camera app, but that gap has been filled by numerous 3D scanning apps.

  • Denoyel is keeping a running list on his blog, and he told me that the space is changing quickly. "I'm impressed by the release velocity of some of those apps," he told me. "Scaniverse or Polycam have been releasing updates on a weekly basis, and those apps keep getting better."

While most iPhone lidar scanning still happens in dedicated 3D capture apps, some other apps are starting to integrate it as a feature. A trailblazer in the space is 3D telepresence provider Spatial, which recently added to lidar scanning its mobile app.

  • Spatial users can now scan 3D objects and easily share them with meeting participants, which is especially helpful for design reviews. People can also scan offices or other rooms and then have their meetings in those virtual spaces.
  • "This stuff used to take forever," Spatial CEO Anand Agarawala told me recently. With the iPhone, it's not just quicker, but also a lot less expensive. Spatial paid thousands of dollars to have its first office scanned for demonstration purposes. When the company recently moved into a new office, it simply captured the space with iPhones.
  • "The power of this lidar scanner is really impressive," Agarawala said. "It's such a powerful sensor."

Before you get too excited: Even fans of the iPhone's lidar admit that it's far from perfect. There's a notable quality difference when compared to professional scans, which becomes even more obvious when you use room-scale assets as environments in VR.

  • "It's quick and dirty," Agarawala said. Maybe not ready to replace professional scanning just yet, but good enough to offer a taste of what's possible. "It's so good it makes you [want] more," he said.

Mobile lidar scanning could make it possible for everyone to easily capture assets for AR, VR and more — eventually. Imagine someone scanning their living room to import it into a VR world, or capture their dog to add it to an interactive movie.

The demand for such assets is there, according to Denoyel. "People are ready to pay for assets generated with [the] iPhone lidar even though it's not prime quality yet," he told me. "I've sold a few of them."

Fast Forward

  • On Protocol: Viewers are cutting the cord, so Scripps is launching more TV networks. The media company wants people to ditch cable and buy antennas instead.
  • Roku signs deal with Saban Films. The Roku Channel will get select Saban movies three months after they debut in theaters.
  • Nvidia Shield devices finally get an Apple TV app months after launching on other Android TV devices. Goes to show how hard smart TV app distribution can be.
  • YouTube has paid more than $4 billion to the music industry over the past 12 months, and YouTube Music just had its best quarter ever.
  • Oculus Quest may get a pass-through keyboard feature. Soon, you may be able to see parts of your desk while in VR.
  • TiVo is saying bye-bye to Best Buy. Products of the DVR maker have disappeared from Best Buy store shelves.
  • Ikea's next Sonos speaker just leaked, and it's a picture frame. Docs suggest that multiple frames can be daisy-chained.
  • Theaters just had their biggest weekend since March 2020. But what's going to happen once everyone has crossed "go to a movie" off their post-pandemic bucket list, especially with many films available for streaming as well?

Auf Wiedersehen

What do you call an OOO email response when no one is ever in the office anymore? It's one of the many questions I've been pondering as I prepare to take next week off. Sure, there's always AFK (away from keyboard), which coincidentally was one one the first names pitched for this very newsletter. But somehow, there should be a better way to describe taking a break after what feels like a very long pandemic year. Maybe NMZ (no more Zooms), VAHF (vaxxed and having fun) or ATB (at the beach)? Oh wait, I got it: BRB.

Thanks for reading — see you in two weeks!

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