AT&T CEO John Stankey said the company’s anticipated ad-supported, price-reduced iteration of HBO Max will debut in the second quarter.
“Building large subscription bases of customers who pay us every month for something has been one of the hallmarks of our business,” he told investment analysts during Wednesday morning AT&T quarterly earnings call, indicating a need to expand HBO Max's reach. “We need to evolve that, and this is the next step in making this happen.”
HBO Max is priced at $15 a month. AT&T has not disclosed how much a price-reduced version partly supported by ads would cost consumers.
The revelation came after the nine-month-old HBO Max streaming service enjoyed its best quarter yet, adding 7 million customers to reach 17.2 million subscriber activations overall. The total domestic HBO subscriber base finished 2020 at 41.5 million.
In addition to trying to grow that base and convert the bulk of its customers to the new HBO Max app-based service, AT&T’s WarnerMedia division is also poised to launch HBO Max to Europe and Latin America. HBO has around 61 million subscribers worldwide.
For HBO Max in the U.S., growth was fueled in the fourth quarter by the top OTT device platforms, Roku and Amazon Fire TV, finally offering app support for the service.
Notably, the streaming service also began a term as the focal point of WarnerMedia’s theatrical release strategy in the pandemic, with Wonder Woman 1984—a film originally scheduled for wide global theatrical exhibition in the summer of 2020—debuting on Dec. 25 on HBO Max, the same day it premiered in a small handful of still-open theaters.
Stankey used Wednesday’s call to defend the day-and-date release decision for Wonder Woman 1984, as well as the 17 Warner Bros. films on the company’s 2021 slate.
“We’ve seen other studios continue to snowplow releases,” he said. “It’s going to see a very crowded theatrical field in late 2021 and early 2022. We just don’t believe that just because there’s more content showing up in theaters, that’s going to dramatically improve the size of audiences in theaters.”
By choosing to bolster the new streaming service with its slate, AT&T and WarnerMedia have made “lemonade out of lemons,” and have maximized profits on what is a “spoiling asset,” Stankey explained.
He added that there are “things on the margins” WarnerMedia might have done differently to sooth the company’s angry creative partners. But that WarnerMedia is well on its way to compensating producers, talent and guilds and soothing any sore feelings.
Moving further along in 2021, Stanley said there will be “spikeyness” in regard to HBO Max’s subscriber growth, with major tentpole releases driving signups more than mid-range movies.
“But we feel pretty good about where we are in the early innings of this,” he added.
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