With 34 million U.S. subscribers, HBO’s premium cable channel and streaming service is a little more than half the size of Netflix’s domestic audience.
In five years’ time, though, AT&T executives want to convert all of their HBO customers to HBO Max streaming subscribers, as well as grow their subscriber base by nearly 150%. The company hopes that by 2025, it will have 50 million customers in the U.S., while internationally, it’s aiming for up to 90 million subscribers.
HBO Max’s plans, which were detailed during the Oct. 29 investor day in Burbank, Calif., are centered largely on building up the audience and subscriber base as fast as reasonably possible.
“As the pay TV bundle is unbundled, the cord is cut, and as ubiquitous connectivity bounds, we must now secure our path to the market for the next decade,” WarnerMedia CEO John Stankey said at the event. “In the era of Amazon, Apple, Google and Netflix, scale is no longer defined by distribution to a quarter of U.S. consumers. It’s a global game.”
The strategy to scale up quickly, which AT&T hopes will simultaneously bolster its wireless and pay TV offerings, is one that has become commonplace as traditional media players seek to find a foothold in the fast-growing streaming video market.
Lacking the luxury of time to build up a subscriber base from scratch—as CBS All Access did when it launched in 2014—upcoming streaming services like Disney+, Apple TV+ and NBCUniversal’s Peacock are all looking for ways to leverage their existing consumer bases into streaming customers so they can get as big as they can, as fast as possible.
For HBO Max, leveraging AT&T’s existing customer base means it will be bundled as a free perk included with premium AT&T video, mobile and broadband packages. The 10 million HBO subscribers who are also AT&T cable customers, as well as subscribers who pay directly for HBO’s existing streaming service HBO Now, will get HBO Max for no additional cost. (AT&T is in discussions with other cable and satellite providers to allow for HBO Max access to current HBO subscribers, but the company does not foresee challenges in those discussions.)
Other companies also racing to scale up are taking a different tack that better suits the business assets in their arsenals. Disney, whose service is slated to debut Nov. 12, has set an even more ambitious goal in terms of scale: 60 million to 90 million subscribers worldwide by 2024. To achieve that scale, Disney has rolled out several pricing promotions, offering a steeply discounted three-year membership plan for people in Disney’s fan club and a bundled subscription to Disney+, Hulu and ESPN+. One of the biggest drivers of new entrants into the Disney+ ecosystem will come from a partnership with Verizon, which will extend a free year of Disney+ to all new and existing Verizon wireless and internet customers.
As the premiere date approaches, Disney is also using its substantial marketing muscle to advertise the service on cruise lines, buses, retail stores and theme parks, along with promotions across Disney and ABC television properties, according to the New York Times.
Meanwhile, Apple is using its service, Apple TV+, as a perk to drive more hardware sales, which have softened in the last several quarters. The company is offering up a free year of its $4.99 a month Apple TV+ subscription to anyone who purchases a new iPhone, iPad, Apple TV or Mac product in an effort to keep Apple customers coming back. That means Apple TV+’s initial subscriber base will scale up immediately with the free year trial and give Apple a longer runway through which to develop more programming that it hopes will attract more customers to the company’s growing services business. (Apple has not indicated that it will include any library content on Apple TV.) The streaming service will also get a leg up when Apple leverages its existing web of customer relationships to promote programming across Apple devices.