AT&T CEO John Stankey called the launch of the company’s key direct-to-consumer stream service HBO Max “flawless,” and blamed Amazon for the lack of distribution on that key streaming platform.
AT&T announced that HBO Max finished the quarter with 36.3 million U.S. subscribers to HBO Max and HBO, up from 34.6 million at the end of 2019.
“We effectively established a new distribution framework for WarnerMedia,” Stankey said, speaking Thursday on AT&T’s second-quarter earnings call. “The platform performed superbly. Activations were strong. The content is world-class, And the team developed and launched the service and the short timeframe and managed to get it all over the finish line in the middle of a pandemic.”
One problem with the launch came with Amazon.
“We worked hard to make HBO Max available to consumers through nearly every content distributor in the United States.We tried repeatedly to make HBO Max available to all customers using Amazon Fire devices including those customers that have purchased HBO via Amazon,” Stankey said. “Unfortunately Amazon has taken an approach of treating HBO Max and its customers differently than how they've chosen to treat other services and their customers.”
HBO Max also failed to secure a deal with Roku, but Stankey did not mention that important streaming distributor.
Despite that, Stankey said HBO Max was “right on track” with its targets for subscribers, activations and revenues. He added that customer engagement has exceeded expectations in the early days, with the average number of weekly hours spent on HBO Max is 70% higher than HBO.
He said the engagement “clearly demonstrates the strength of our library and our success broadening the appeal of the product to more family members” and noted that the broader appeal is expanding the product beyond the traditional HBO subscriber base.
Stankey said that WarnerMedia content was among the most popular on HBO Max, driving the majority of total hours consumed on the platform.
“In the streaming business, your content library is the key to keeping custoermers, but its the new originals that drive subscriber acquisition,” he noted.
Because of the pandemic, HBO launched with six new original shows, all of which were in the top 25 most viewed series on the platform.
“By August we'll have 21 new original series on Max which we expect to sustain our near-term acquisition efforts,” he said. “We view getting our production back online as critical to making our 2021 subscriber plan.”
One month after launch HBO Max had about 3 million retail subscribers and 4.1 million subscribers had activated their Max account. Of those more than 1 million were wholesale subscribers through AT&T. "As you might expect we're seeing more rapid activation with subscribers who are active users of the HBO digital offers, but we still have work to do to educate and motivate exclusively linear subscriber base and will continue to work with our wholesale partners to drive these activation rates," Stankey said.
The HBO Max launch has also driven AT&T customers to upgrade to higher tiers of broadband service, he added.
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Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.