HBO Max had a “flawless” launch in May, according to AT&T CEO John Stankey, who provided investors with some details about the broadcast launch during a conference call with Wall Street analysts on Thursday.
The call followed the release of the company’s second-quarter financial results, which saw the company beat earnings forecasts despite significant headwinds due to COVID-19.
About 4.1 million general subscribers signed up for Max and HBO during the quarter, including about one million AT&T wholesale subscribers, Stankey said. The company entered into a series of distribution agreements with pay-TV providers and technology companies like Apple and Google, although it has yet to reach an agreement with Roku or Amazon Fire TV, which together reach nearly 80 million US households. . With at least 10 million AT&T pay TV subscribers also paying for HBO, the service started with an initial advantage.
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“We effectively established a new distribution framework for WarnerMedia,” said Stankey, with HBO Max coming together “in a short period of time, and we managed to reach the entire finish line in the midst of a pandemic.”
While executives offered few real-time streaming numbers, they said HBO Max’s share has been 70% higher than HBO Now, the independent streaming service launched in 2015. HBO’s full offering, which is On HBO Now, it’s also the core of HBO Max, which also adds Warner Bros library offerings and a range of other company brands.
The reaction to HBO Max has been noticeably less exuberant among many Wall Street analysts and pockets of existing or potential clients. He’s also seen a rotation of the launch schedule, including the full set of eight Harry Potter films, the availability of which turned out to be a three-month separation from a general rights agreement with NBCUniversal. gone With the Wind, the 1939 film, sparked a bad reaction when he appeared on the service amid national protests against racial injustice.
Craig Moffett, an analyst at Nathanson, wrote in a note to customers Thursday that HBO Max “has gotten off to a rather poor start.” On the plus side, he acknowledged, “it cleared the bar for growing well beyond the baseline of pre-launch ‘regular’ HBO subscriptions.”
Customers have complained of being confused by the multiple HBO brand offerings, and HBO is canceling its authenticated HBO Go app in the name of brand consistency. It will continue to offer HBO Now as an option, priced the same as HBO Max, for any purist who isn’t interested in Max’s additional ingredients.
Stankey, a veteran AT&T veteran who became CEO just a few weeks ago, brought Jason Kilar on as CEO of WarnerMedia in the spring. That move followed a series of restructuring efforts, which merged most of the historically disparate operations of HBO, Turner, and Warner Bros.
Touching on a hot topic among movie fans, exhibitors, and Hollywood executives, Stankey said “it wouldn’t be the case” that Christopher Nolan Beginning would stream on HBO Max before a theatrical run. Such a scenario has been presented among ticket buyers and in the investor community. Lightshed Partners analyst Rich Greenfield proposed in a blog post this week that HBO Max will release the film and use it as a “battering ram” to force Roku and Amazon to the negotiating table.
At $ 15 a month, HBO Max is at the top end of the broadcast spectrum, competing with lower-priced new entrants from NBCUniversal, Disney, and Apple, in addition to established players like Netflix and Amazon. Compared to previous Time Warner and WarnerMedia streaming offerings, Stankey said Max “appeals to a broader demographic with attractive and diverse content.”
For context, Disney reported that it had 54.5 million subscribers across multiple global territories in early May, and Netflix led the pack with 193 million subscribers worldwide. Peacock and Apple have yet to release numbers, only very general indications of the viewer’s appetite for certain programming.
AT&T is “on track” with estimates given to analysts last fall for subscribers, activations and revenue, Stankey said. The company forecasts 50 million Max subscribers in the US by 2025, with 75 million to 90 million worldwide.
HBO Max’s math is complex, given that many existing customers already have access to it at no additional cost, either through their HBO subscriptions through a variety of outlets or AT&T. Stankey said the company has “work to do to educate” customers about Max’s benefits. The company said HBO had 36.3 million subscribers, including HBO Max, as of June 30, 5% more than at the end of 2019.
With 15,000 hours of programming, HBO Max is a healthy-sized service, but COVID-19 has impacted its operations hard, removing the marquee launch title, a reunion of the cast of friends. The six Max Originals released when the service launched in May all ranked in the top 25 shows seen on the platform, Stankey said, calling it an auspicious sign. In the corporate earnings report, AT&T said that Warner Bros. TV show sales to HBO Max helped offset pandemic-related stress at WarnerMedia during the quarter.
Stankey acknowledged that a distribution showdown with Amazon Fire TV continues, and claimed that the tech giant is treating HBO Max differently than other third-party services.
The cheapest and most advertised version of HBO Max promised in 2019 is still in the works for a launch in 2021, the CEO said.
