AT&T’s video streaming service HBO Max will definitely raise eyebrows for being more expensive than rivals, but it hopes to compensate for that with tried and tested content. The streaming service will launch next year in May at a cost of $14.99, a figure that is between two-to-three times what other formidable rivals will charge.
Initially, HBO Max will launch with more than 10,000 hours of content. Most of the content will originate from Warner Media properties such as HBO, Warner Bros, TNT, CNN, and Cartoon Network.
Some of the TV shows include one of Netflix’s most-streamed show, Friends. Others include The Big Bang Theory and The West Wing. The video streaming service will also have a library of 1,800 movies at launch. This includes the Matrix trilogy and The Lord of the Rings series.
There are also plans to add new original content that made HBO what it is, and this includes a prequel of the award-winning Game of Thrones series known as House of the Dragon.
By 2021, there were will be 50 “Max Originals.” And on an annual basis, Warner Media will release up to 10 original movies on HBO Max.
All the content that will be made available on HBO Max will still be accessible on HBO. Subscribers of the premium cable service will get HBO Max at no extra cost. With its expected monthly charge being what the HBO cable service charges, AT&T seems to have been left with little to no wiggle room.
A lower HBO Max monthly fee made with a view of aggressively competing with the likes of Disney+ and Apple TV+ would have led to a cannibalization of the traditional cable service. On the other hand, lowering monthly charges across the board would have hit the revenues of its newly acquired media unit hard. With the rise of cord-cutting, AT&T seems to be banking on shifting its HBO subscribers to HBO Max while hoping for minimal churn. But with Disney+ pricing its service at $6.99 and Apple TV+ at $4.99, it will be interesting to see whether HBO Max’s impressive content library will prevent an exodus.
Despite the higher monthly charge, AT&T expects to grow the wider HBO subscriber base to 50 million by 2025. With the online streaming market at a relatively young stage, AT&T’s strategy seems to be about wining market share and worrying about the profits later.
According to AT&T CFO John Stephens, subscribers for both HBO and HBO Max will increase by 3 million per year, growing to 50 million in 2015 from the current 34 million. Next year $2 billion will be spent on new content, but this is projected to increase revenue by only $100 million.
During the ensuing period, losses from the service are expected to hit a high. The video streaming service is only projected to become profitable in 2015 after having lost more than $4 billion in the preceding years.
After announcing the detailed plans of the service, AT&T’s stock fell by slightly over 1%. Still, the stock is up 34% since the year started.
Analysts have had a bullish stance on AT&T’s stock for a good part of the year.
This article was edited by Gerelyn Terzo.