Reuters reports the price, which many expected to be higher, surprised the financial analysts and investors attending the WarnerMedia presentation on Tuesday.
HBO Max is expected to reach 75 million to 90 million global subscribers by 2025, with about 50 million of these coming from the United States. The new service is expected to generate about $5 billion in U.S. revenue by 2025.
The stakes are high for AT&T, which is saddled with debt from a $134 billion acquisition spree to combine media conglomerate Time Warner and satellite TV provider DirecTV with the second-largest U.S. wireless phone company by subscribers.
The success of HBO Max is in many ways a referendum on a strategy to merge content with the means to distribute it.
HBO, which invented high-end, subscription programming, is playing catch-up in the streaming era dominated by Netflix.
To compete, AT&T has committed to invest up to $4 billion in additional HBO Max content by 2025, executives said, just a day after reporting tepid media results for the third quarter.
The investment falls far short of its biggest rival Netflix Inc, which has earmarked $15 billion in cash on content spending in 2019. But AT&T and WarnerMedia executives believe they have content and ways to get it in front of consumers that are lacking at Apple Inc, Walt Disney Co and Amazon.com.
WarnerMedia Chief Executive John Stankey this month told Reuters that HBO Max will be available this spring to 10 million current AT&T customers in the United States — a mix of wireless, satellite TV, and some HBO Now subscribers — at no extra charge.
Besides being free for existing HBO subscribers, it will also be offered for free to premium AT&T wireless and broadband customers. If WarnerMedia had charged a lower price for HBO Max, it would have had to lower the price of HBO to its cable TV distributors.
The Wall Street Journal reports executives said they expect most customers of HBO’s current streaming service, HBO Now, to take a free upgrade as well. “We’ll convert as many as we can as quickly as we can,” AT&T finance chief John Stephens said, and with all the new content being added, “why wouldn’t they?”
“The price point of $14.99 for HBO Max strikes a good balance between not cannibalizing HBO’s existing revenue base, while also addressing the competitive environment in streaming television,” said Sam Hendel, president of Levin Easterly Partners and a portfolio manager at the firm, which owns about 3.5 million shares of AT&T. “The HBO Max content offering is extremely robust and I think it will be well received by investors and consumers.”
No comments:
Post a Comment