There’s a business adage that Tony Goncalves, head of WarnerMedia’s commercial unit, keeps going back to as the television industry faces a seismic shift from linear to streaming. Industry needs and consumer needs aren’t always aligned—but consumers tend to win.
“There’s no question consumers are guiding us as to what we need to do as a company, and what we need to do as an industry,” Goncalves told Adweek TV editor Jason Lynch during Adweek’s virtual Convergent TV Summit, which began Tuesday afternoon. “They’re consuming content more openly, more freely, and on a variety of different platforms ranging from linear to direct-to-consumer on-demand applications. That’s ultimately what’s driving the transformation that you’re seeing.”
That consumer shift, in which viewers are flocking to live and on-demand streaming options and cutting the cord in droves, is having an organizational effect on legacy television businesses. WarnerMedia and NBCUniversal both underwent major restructures in August to position streaming at the center of their companies, while Disney announced its own similar reorganization on Monday evening.
WarnerMedia’s restructuring in August, which elevated Goncalves from his CEO role at Otter Media to overseeing a new unit that includes ad sales, content licensing, home entertainment and distribution, was crucial for WarnerMedia to be able to move at the pace of consumers, he said.
“What it ultimately does is it facilitates our ability to get the incredible stories that many talented people create in front of consumers in a much more nimble and engaging way, and ultimately building the next generation of advertising in which you can now bring brands along for that ride as well,” said Goncalves, in his first public comments since stepping into his new WarnerMedia role.
Like other executives, Goncalves said that Covid-19 has poured rocket fuel on shifts in the industry, turning the focus on winning over consumers.
“One could argue that this was happening and it was just happening at a slightly slower pace, but the pandemic has just accelerated change and the rate of change,” he said. “I think it’s incredibly exciting that as an industry, we are beginning to put the consumer first and really put our ear to the ground and let the consumer guide what we ultimately do—the stories we make, how we package them, how we distribute them and how we monetize them.”
Goncalves is taking on a major role at WarnerMedia at a moment of considerable change, not just organizationally but with new streamer HBO Max. Covid-19 hit just two months before WarnerMedia was slated to roll out the streamer, which sits at the center of WarnerMedia’s broader streaming ambitions, and complicated an already challenging rollout immensely.
“It’s all hard,” Goncalves said, pointing to the product, tech, programming and marketing elements of a launch. “Now, tell all of these thousands of people that are working on this that they have to work from home.”
There were “many” conversations about holding off on launching HBO Max until the market stabilized, Goncalves said, but the WarnerMedia team decided a delay wouldn’t do. Since its May 27 debut, HBO Max has attracted 4.1 million new subscribers, clearing year-one projections; Goncalves said HBO programming remains a major driver among viewers on the service.
But with hopes to grow larger, and with fierce competition in the streaming space, HBO Max has more to do, especially with the anticipated ad-supported tier of the streamer that is expected to premiere in 2021 and help WarnerMedia work through its own advertising future after a flexible upfront season, and with new WarnerMedia ad sales chief Jean-Paul Colaco, who began this week.