Following a rocky 2020 launch year, during which HBO Max struggled to gain distribution and establish early subscriber growth, the man in charge of the platform, WarnerMedia CEO Jason Kilar, presented Max as the center piece of corporate parent AT&T’s “investor day” event Friday.
HBO Max, which is about to launch an ad-supported iteration in June, and which will expand into 60 additional countries over the next nine months, has more than found its footing, Kilar said. Adding more subscribers in the final months of 2020 than it did in the previous seven years combined, Kilar said HBO Max’s growth pace is now two years ahead of its original October 2019 forecast. HBO could reach 150 million subscribers worldwide by 2025, he boasted, far outpacing an original high-end forecast of 90 million.
Kilar touted HBO Max’s ability to maintain an industry-leading $14.99-a-month price point. And citing data from several “outside sources,” he implied, not so subtly, that the streaming service generated more money than the one that has often been unfavorably compared to, Disney Plus.
“We believe we are the No. 2 revenue generating standalone subscription service in the U.S.,” Kilar said during an event in which seemingly around 71% of the investment analyst questions centered around HBO Max, part of a WarnerMedia division that AT&T said accounts for only around 17% of its business.
HBO Max closed 2020 with 17.2 million subscribers to the app-based HBO Max service, but more than 41,000 million U.S. customers overall. It was recently estimated that there are about 40 million U.S. subscribers to the $6.99 Disney Plus service.
Netflix has more than 73 million subscribers, most of them paying $13.99 for the standard plan.
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Kilar said that HBO Max will deploy into 39 counties within Latin America and the Caribbean this summer, and 21 countries across Europe later in the second half of 2021.
The more anticipated announcement Friday, however, was the June launch date for the new ad-supported version of the service.
Kilar also disclosed that WarnerMedia has already secured $80 million in upfront advertising commitments for the new HBO Max iteration.
While he did not detail pricing, he did assure investors, “We are capitalists." And based on his time at Hulu, where he also deployed a hybrid ad-based/subscription streaming business in the U.S. and abroad, Kilar said he “feels very good about our ability to deliver whatever price break is given to consumers and make it accretive" to AT&T investors.
Meanwhile, beyond new bullish subscriber growth forecasts, Kilar said his company’s new projections now call for HBO Max revenue to more than double to $15 billion over the next few years. HBO Max could break even as soon as 2025, he claimed, with average revenue per user rising from a current level of $12 to $14 by that time.
A substantial content budget boost is already underway, he said, far beyond the $2.4 billion earmarked back in late 2019, but he didn’t specify by how much.
Kilar took time to manage up, noting that 25% of HBO Max subscriptions come from AT&T bundling the platform with wireless and wireline services.
Earlier in the broader investor day presentation, AT&T Communications CEO Jeff McElfresh noted that the Net Promotor Score (NPS) on AT&T services increases by 20 points when the telecom bundles HBO Max with them.
Kilar, who took a brutal beating in the Hollywood creative community several months ago when he made what seemed like a wise pandemic-era decision to divert WarnerMedia’s 2021 theatrical movie slate to debut on HBO Max on day one, also lavished praise on his platform’s programming brands, using the word “beloved” no less than half a dozen times.
Among the brands he paid particular attention to, DC Comics may lack the street cred of Marvel, a creative source central to the post-pandemic expansion plans of Disney Plus. But starting with the March 18 day and date release of the “Snyder Cut” of Justice League, WarnerMedia and HBO Max will begin to “dive deeply” into the DC universe, Kilar said, launching “two dozen” DC-based movies, video games and documentaries.
While also paying homage to new Kelly Cuoco dramedy Flight Attendant, which he said is now the No. 1 original series on HBO Max, Kilar positioned WarnerMedia’s 98-year-old programming library as a hedge some of its competitors—Apple TV Plus?—lack.
“This allows us to perform a bit better than others in the industry,” he said.
Notably, Kilar also specified some limits.
HBO Max, he said, has no plans to include live sports.
He also tried to underpin the declining linear pay TV business, minutes after his AT&T executive peers shed further light on plans to divest DirecTV, U-verse and AT&T TV into a spinoff partnership with private equity firm TPG.
“Eighty-five million homes still subscribe to bundles of linear channels,” Kilar said. “That’s bigger than any streaming service … When you look at that business, and I’ve run a lot of businesses in my live, that’s a darned good business that generates a lot of cash flow.”
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