Why Podcasts Could Be a Differentiator for HBO Max

AT&T's (NYSE: T) HBO Max has its work cut out for it. It's entering a subscription-video-on-demand (SVOD) space that seems to grow more crowded by the day. Competing with industry leader Netflix would be daunting enough even if Disney were not about to do the same. For HBO Max to succeed, it will need to make the most of existing HBO properties and keep producing top-notch original content that subscribers will be willing to pay for.

And that, of course, means knowing what people want to watch. For HBO Max, as well as for streaming competitors like Netflix, Amazon, and Disney, smart investment in original content means knowing and predicting viewers' tastes. And while these tech companies bring lots of analytics to bear on that job, this is not really all that different from market research, pilots, and all of the other methods that movie and TV studios have used to find winning ideas for generations.

What matters is this: The better a streaming company's tools for figuring out what people watch and why, the better positioned that streaming company is to come out with the next big streaming hit. And HBO Max is doing something that may give it an edge in this department: It's making podcasts.

A woman listening to audio on her smartphone.

Image source: Getty Images.

Hear, hear

At first blush, it seems a bit unusual that a streaming video company would make audio-only content. Streaming video is generally focused on, well, video.

But streaming video apps also work on smartphones and other mobile devices, which are convenient for listening to podcasts. And AT&T's HBO has already come out with shows similar to the planned podcasts, albeit in video form. The planned podcasts are "behind the show"-type products, and HBO has long run video specials taking viewers "behind the episode" after big hits like Game of Thrones.

It also helps that AT&T can leverage its presence in the mobile space to make HBO Max's podcasting dreams more attainable. The podcasts will be available on the HBO Max app, and the HBO Max app will soon come preloaded on all smartphones given to AT&T mobile customers.

HBO Max's mobile app is ambitious in other ways, too -- for instance, there will be social media-esque features like "stories" from HBO Max stars. (This is something that Spotify has dabbled in, too.) These sorts of features may or may not be particularly interesting to potential customers, but their role as subscription perks is almost certainly less important to HBO Max than something else that they provide: insights into subscribers' interests.

Ears and insights

HBO Max is the only video streaming service dabbling in podcasts right now, but it's not the only streaming service doing so. Audio streaming service Spotify is in the midst of executing a big podcasting strategy right now. Podcasts make sense to Spotify primarily because of advertising interests, because as it turns out, it's a lot easier to build an advertising profile for a streamer based on the podcasts they listen to than it is to do so based on the music that they listen to. Spotify is made for music, but the insights it gains from podcasts are greater.

HBO Max is only planning podcasts about its own shows, at least for now. It's unlikely that HBO Max's podcast listener data is going to help it determine the age, sex, and political leanings of individual customers. But there are still important insights to be gained.

For instance, HBO Max will have an easier time telling regular fans from die-hards. There's a difference between a viewer who watches an episode of a show and a viewer who watches the show, watches the after-show, and listens to the podcast. And if HBO Max's podcasts prove to be popular, the service could easily ramp them up and try to come up with podcasts topics that maximize their insights. All of this could inform the next original show or movie that HBO Max puts out -- which, in turn, could have its own affiliated podcast, renewing the virtuous cycle.

The more they know, the more you watch

Whether HBO Max's subscribers are interested in audio content remains to be seen, but success would help the service gain insights into the nature of fan bases and shows. Podcasts don't require huge budgets, so this could be a very cost-effective way to gain an edge in the all-important original-content wars. If HBO Max can use its podcasts and other mobile-app perks to better understand its subscribers, it will have an edge in a very competitive space.

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