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As WarnerMedia follows the international playbook of HBO for the rollout of its streaming service HBO Max overseas, it has hit a fork in the road.
The media giant on Thursday said it may delay its launch of a localized version of HBO Max in Europe in some territories to early 2022 as it “leans into” generating more subscriber growth in Latin America. AT&T CFO Pascal Desroches told analysts during a morning call that the bulk of HBO Max subscriber growth in 2021 will come from lower-revenue subscribers, mainly from a localized version in Latin America.
As WarnerMedia focuses on Latin America near-term to exploit that growth opportunity, Desroches warned WarnerMedia may delay its HBO Max launch in some areas of Europe until early 2022. A European launch for HBO Max had earlier been set for the second half of 2021.
“We’re seeing good momentum, especially in Latin America,” Desroches reported. That view was seconded by WarnerMedia CEO Jason Kilar, who talked about lessons learned from the Latin American rollout.
“The team did a remarkable job in terms of planning for this launch and making sure we put our best foot forward in terms of lead productions, but an incredible library,” Kilar told analysts, as WarnerMedia also lined up key local distribution partners. “The tech and product works and it’s a modern experience that we’re very proud of, and finally the value proposition is a very strong one,” he added.
Kilar did not break out the subscriber growth in Latin America, where HBO Max only launched June 30, but did report: “We’re seeing material, incremental subscriber additions.”
To maintain subscriber growth, AT&T CEO John Stankey talked about the content pipeline at HBO Max. “We continued to deliver great content,” Stankey told analysts during a morning call.
He pointed to upcoming new seasons for Succession, Raised by Wolves and Love Life, and on the movie front he touted releases of Space Jam: New Legacy, Suicide Squad and Dune. Stankey also pointed to the Emmys nomination haul for HBO and HBO Max last week.
“WarnerMedia received more than 180 nominations. I’m really proud of the way the team has executed,” he said. Stankey also talked about timing for completion of the WarnerMedia spinoff with Discovery.
“We expect it will be next year, and probably close to a full-year review to get this done,” he told analysts. In May, AT&T unveiled the media mega-merger of WarnerMedia with Discovery, designed to create a global streaming powerhouse to be called Warner Bros. Discovery.
WarnerMedia launched streaming service HBO Max about a year ago, in June adding an advertising-supported version to broaden its consumer appeal.
Andy Forssell, executive vp and general manager, WarnerMedia Direct-to-Consumer, tells THR that, as Desroches said on the earnings call, the launch in Latin America came too late in the second quarter to be a big driver. “It wasn’t hugely behind what powered a really strong quarter. I think the content did that,” he said.
But details on the success in Latin America will be disclosed down the line. “It it was only two days [of Latin America], a really strong start,” he said. “This coming quarter we will disclose a lot more once we have the first full quarter of operation, but I’ll just say: The momentum is really strong out of the gate, and it’s really hard to predict that, especially in a new region. How is the new content going to land? The response was fantastic.”
A potential delay to the HBO Max Europe launches doesn’t hold back the streamer though, given management has boosted its full-year 2021 subscriber growth forecast. “Even though we may push some of that schedule, we raised guidance,” said Forssell. “We are seeing really good return on Latin America and we are extremely optimistic.”
Importantly, he said, “we are learning. And what you learn is the complexity of doing this right. The team executed really well, but as you add languages and new sets of subtitles and audio, it is all built on one platform, it is working very well, but we want to do it right.” Concluded Forssell: “And so you adjust your schedules as you go along. It is about executing really crisply and making sure that we launch well and get the right kind of returns out of Europe and the countries beyond that.”
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