Here’s what we don’t know about those 12.6 million HBO Max subscribers
It certainly looks like exciting progress. AT&T (NYSE: T) CEO John Stankey said publicly at a recent investor conference that 12.6 million people had activated the company’s new streaming service, HBO Max. That’s up from 8.6 million at the end of the third quarter and up from zero before the product launched in late May. Not bad, all things considered.
But don’t confuse “activations” with “paying customers”. A large number of people are eligible for free access to HBO Max, and most of them new 12.6 million users maybe of that ilk.
Most may not pay for HBO Max
It’s unclear how many existing AT&T customers could take advantage of HBO Max at no additional cost to them. But it is in the “tens of millions,” according to some outlook provided by the company shortly before the service’s launch.
Customers of AT & T’s premier Internet, TV, and wireless phone services, like its Unlimited Elite plan, don’t have to pay for it, although not everyone can get it free forever. AT&T TV’s Ultimate plan, for example, only offers one year of free streaming service. Consumers who subscribe to HBO through a conventional cable provider such as Communication of the Charter‘s Specter or Comcast‘s Xfinity – as well as through AT&T DIRECTV’s cable-satellite service – also have Probably got free access to HBO Max. It covers most of the country that watches cable. So, we still don’t know exactly how many people these offers might encompass, but “tens of millions” doesn’t seem like a stretch.
And there is the catch. If most of the tens of millions of people who could watch HBO Max shows and movies for free still haven’t activated the option seven months after its launch, how much is actually paying for it?
To that end, in September, AT&T noted that only 3.6 million “retail” HBO Max subscribers had signed up. These are people who do not qualify for free HBO Max due to an existing relationship with AT&T and purchase it directly through AT & T’s Warner Media arm. That’s just not much, especially considering that Comcast just announced that its fledgling streaming service called Peacock is now serving 26 million viewers after launching around the same time as HBO Max.
Granted, most of these Peacock subscribers seem to be using the completely free, ad-supported version of the platform. However, Comcast is still monetizing them, using a lot of content that is also monetized in a more traditional way.
This reality only underscores the chances that most of HBO Max’s 4 million new viewers won’t pay “retail” customers. Consumers seem to say that they will gladly tolerate TV commercials, but they are not interested in paying for another media streaming a service.
AT&T shareholders don’t have to sweat … yet
The muted interest paid for HBO Max does not inherently herald the end of AT & T’s most recent pet project. The great strength of the streaming platform was always going to be a customer retention tool for other AT&T services. It hasn’t changed.
Nonetheless, it cannot be fully harnessed as a retention tool if most of AT & T’s 176 million wireless subscriber connections and much of its nearly 32 million cable TV and broadband customers are not listening. The prospects for HBO Max as a standalone revenue-growing entity are respectable, but not quite upsetting.
To that end, investors will want to research the number of retail HBO Max subscribers who are on board when AT&T releases results for the quarter ending this month. This is arguably the best measure of the platform’s competitiveness in the premium SVOD space. As it stands, from what we actually know, AT&T is not taking it out of the park.
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