HBO Max Reached 4.1 Million Subscribers One Month After Launch

HBO Max Warner Media Investor Day - Logo 2019- Getty 2- H 2020
Presley Ann/Getty Images for WarnerMedia

CEO John Stankey lauds the "flawless launch."

HBO Max attracted 4.1 million overall subscribers after its first month, AT&T CEO John Stankey said Thursday, lauding his team for a "flawless launch" despite the novel coronavirus pandemic. 

The figure includes more than 1 million wholesale customers from AT&T wireless packages that include HBO Max. About 3 million customers were regular retail subscribers. 

The company hopes to reach 50 million to 55 million HBO Max customers in the U.S. by 2025, and management said on Thursday's second-quarter earnings conference call that it was on track to meet those subscriber, as well as activation and revenue, goals.

Combined, HBO and HBO Max have 36.3 million subscribers, up 5 percent since the end of 2019. 

AT&T CFO John Stephens told a recent investor conference that AT&T has been "pleased" with the early trends at HBO Max, but wouldn't share early subscriber figures, signaling that the firm would provide those when it reported its latest results.  

HBO Max launched May 27 with the full HBO catalog plus originals like Anna Kendrick starrer Love Life and a library of old movies and TV shows, including the Studio Ghibli collection and Friends.

At $15 per month, the service is one of the more expensive streaming products on the market. But because it costs the same as HBO, many preexisting subscribers to the premium cable network were grandfathered into HBO Max at no additional price.

Stankey said HBO Max had "world-class content" and was making good on its promise to reach a broader demographic than the traditional HBO service. "Customer engagement has exceeded our expectations," he said, citing 70 percent more average weekly viewing hours than HBO Now has attracted.

WarnerMedia content has been on top of the list, with all six HBO Max initial originals in the top 25 most popular content pieces, he said. With new originals driving subscriber additions, he noted that by August the streamer would have 21 new originals, which "will sustain our near-term sub acquisition effort." 

Stankey said his team was hoping that the WarnerMedia production engine would be able "to fire back up next month" as that would help ensure new HBO Max content in 2021 for continued growth momentum. But he also highlighted that it would take time to return to pre-coronavirus pandemic production levels.  

HBO Max's HBO ties also complicated the streaming service's launch. After its debut, WarnerMedia was operating three separate apps with similar names — HBO Go, HBO Now and HBO Max. The company had hoped that most HBO Go and HBO Now users would automatically get the upgraded HBO Max app. But it wasn't able to strike HBO Max distribution deals with Roku and Amazon, leaving a large portion of its HBO subscribers without a way to access HBO Max on their connected TV devices. (The company has since said it would retire the HBO Go app and rebrand HBO Now as, simply, HBO.) 

Stankey on Thursday's call referenced that, saying "we worked hard to make HBO Max available to consumers through nearly every content distributor in the United States." He said "we tried repeatedly" to make it available to users of Amazon Fire devices, "including those customers that purchased HBO via Amazon." But he said "unfortunately, Amazon has taken an approach of treating HBO Max and its customers differently [from] how they have chosen to treat other services and their customers."

Wall Street has been discussing the growth outlook for HBO Max, compared with streaming giants like Netflix, as well as Disney+, NBCUniversal's Peacock and others. Netflix remains the largest streaming service with 193 million subscribers. Among the new entrants, only Disney+ has released regular subscriber numbers. (It racked up 26.5 million subscribers in its first three months and now has a base of nearly 55 million subs.)

"HBO Max isn't a game changer for AT&T," Evercore ISI analyst Vijay Jayant wrote in a report published days after the launch of the streaming service. "HBO Max's launch has thus far been notably less smooth than the launch of Disney+, due to a variety of factors, including confusing branding, uncertainty about how to get the product, and limitations on how consumers can actually watch the product, particularly on television."

He added: "With that said, we believe HBO Max is a good product, with a strong content lineup, a solid (but not particularly distinctive) user interface, and the backing of a highly-regarded brand."

Explaining why HBO Max isn't as a game-changer for AT&T "in the eyes of investors the same way Disney+ has been for Disney," Jayant said, "content remains a relatively small portion of the AT&T business, not the core as it is with Disney, so we see little chance that investors will begin to look at AT&T on a sum-of-the-parts basis, valuing HBO Max on a per-subscriber basis, as with Disney and Disney+."

Stankey, who became CEO of AT&T on July 1, recently said that amid the novel coronavirus pandemic "we expect the customer demand [for HBO Max] to be as high as what we expected." He added: "Our investment levels are probably a little tempered for this year because a lot of that was production-oriented and we're looking at a situation where we can't drive as much production as we'd like."

Besides converting current HBO subscribers to HBO Max, Stankey also talked about bundling the streaming product with other AT&T offerings, including wireless, broadband and TV packages.