AT&T Touts HBO Max Subscriber Gains, but Many Aren't Paying

WarnerMedia’s bet to release Wonder Woman 1984 simultaneously in theaters and on HBO Max in December, plus two recent major distribution deals with Amazon Fire TV and Roku, seems to have paid off in terms of driving customers to the upstart streaming service. But that growth comes with a catch: Many of those new subscribers aren’t actually paying HBO Max’s sticker price and are instead activating their existing HBO accounts for free. In new streaming subscription figures, released today as part of AT&T’s quarterly report to investors, the company shared that HBO Max and HBO subscribers combined reached more than 41.5 million U.S. subscribers. Worldwide, the company has 61 million combined HBO and HBO Max subscribers (though HBO Max is not yet available internationally). The bulk of those customers are coming into the service through account activations and wholesale agreements, where HBO Max is available as a perk to another service, such as AT&T cable customers or some mobile customers. HBO Max counted nearly 30.8 million total wholesale subscribers by the end of the fourth quarter, and more than half—17.2 million—came in via account activations, according to company filings. Meanwhile, more than 10 million customers have combined one or more connectivity service with HBO Max or HBO. Compare that to the net addition of about 6.9 million new HBO Max subscribers paying retail prices that the company counted in all of 2020. That modest retail growth, though, is still a considerable uptick from the prior quarter. As of the end of September, HBO Max had only 3.6 million retail subscribers, meaning that the company was able to nearly double those sign-ups in three months’ time. In sum, HBO Max had 37.7 million total subscribers as of the end of 2020. The breakdown isn’t a problem for AT&T, whose executives have said that HBO Max serves as an anchor to keep customers invested in other AT&T products and services. But it does reflect how measuring success for subscription video services can vary considerably depending on broader corporate goals, and how sheer subscription size doesn’t tell the whole story for streaming strategy. AT&T executives touted the figures as evidence that their broader streaming approach, which has included an executive overhaul that favored streaming and an industry-rocking decision to simultaneously release Warner Bros.’ entire 2021 film slate on HBO Max and in theaters this year, is working. “Perhaps most remarkable during this pandemic, we launched HBO Max, and about seven months later, we have more than 41 million HBO Max and HBO domestic subscribers—two years ahead of the plan we shared with you in October 2019,” AT&T CEO John Stankey told investors on a call today. AT&T continues to pour money into HBO Max as it looks to build out the service ahead of a planned ad-supported tier debut and an international rollout, both planned for later in the year. The company spent $800 million on HBO Max this quarter; over the course of the year, the company invested about $2.1 billion into the growing streaming service. The company did not break down exactly how much of an uptick it saw through its decision to release Wonder Woman 1984, likely because the film was released at the tail end of 2020 and was presumably still driving sign-ups before it exited the service last weekend. But Stankey told investors to expect subscriber “spikiness” in 2021 as certain upcoming Warner Bros. releases may drive more customers to the service than others. “There’s a difference between what I’ll call a tentpole release and a non-tentpole release. Wonder Woman and the nature of that production value and what occurs in it is different than the balance of many of the other movies in our slate,” Stankey said. “We have other tentpole releases that occur throughout the 2021 release schedule; they’ll be equally as buzzworthy as Wonder Woman, and we have, in between those, high-quality offerings that cater to a less broad audience … We’re not going to see the kind of subscriber spikes that maybe we saw in December and early January every time we put a movie out. That isn’t the design.” Stankey also once again defended the decision to pursue a simultaneous theatrical and HBO Max release, which has drawn criticism from some in the industry and has not yet been replicated by other studios, which are mainly opting to move major releases to the second half of the year or to early 2022. Stankey said that the crowded theatrical release calendar will ultimately depress box-office revenues, and said that the decision to release via HBO Max will help the company get ahead of the streaming business curve. "We don't think that just because there are more movies, that doesn't magically mean it's going to increase the number of people going to watch movies," he said. The HBO Max subscriber update comes ahead of an investor day planned for later in the quarter, where the company will likely detail its plans for an ad-supported tier of HBO Max as well as its international rollout plans. Going into the year, HBO Max also has a newfound distribution advantage. In November, the service became available on Amazon Fire TV devices, which had a user footprint of about 50 million as of December. And last month it debuted on Roku, which had more than 51 million users as of January. Combined, those streaming devices make up the lion’s share of connected TV usage in the U.S., and will allow HBO Max to compete more directly with rivals including Disney+ and Netflix, which are available on those devices. While executives are optimistic about the opportunities that the simultaneous releases present in terms of marketing and customer acquisition, and what the ad-supported tier will mean for the service’s continued growth, the ongoing Covid-19 pandemic continues to pose a production challenge that could throw curveballs in the company’s best-laid plans. “Our expectations are that we start to hit our stride as we hit the second quarter, and it’s really important as we put these new iterations of the product out that we have ourselves in a good position in terms of the content inventory,” Stankey said. “We’re kind of going hand-to-mouth on these, and we’ll be a little more discreet on when we announce what’s coming out and exactly what month, simply because it’s just that tough, and that much of a battle, literally show-by-show, to get this stuff done and get it into the funnel.”

Streaming & OTT

AT&T Touts Big HBO Max Subscriber Gains, but Many of Them Aren't Paying

Streamer had 37.7 million total subscribers in 2020, mostly via account activations

Kelsey Sutton

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Kelsey Sutton