What to Expect From HBO Max’s Growth in Q1

HBO Max Activations AT&T Earnings

What should we expect from HBO Max at the end of AT&T’s Q1? Rafael Henrique/SOPA Images/LightRocket via Getty Images

Netflix faces a perpetual assembly line of obstacles, yet maintains its market-lead in the streaming industry. Disney+ is the fastest-growing streaming service in the world with more than 100 million subscribers in 18 months. Amazon Prime recently surpassed 200 million worldwide subscribers and, while we don’t know how many utilize Prime Video, we can assume the studio isn’t spending $465 million on one season of Lord of the Rings only to be ignored.

According to Deloitte’s 15th Annual Digital Media Trends Survey, 82% of U.S. consumers subscribe to at least one paid streaming video service while the average subscriber has four paid video streaming services. We are in the eye of the peak SVOD consumption storm and it’s not meant to last. As such, it’s fair to wonder where this leaves HBO Max, a service that likely should be more popular.

“Not only are American consumers more reliant than ever on digital media and entertainment, information gathering and social connection, there is also more competition for audiences among a crowded field of entertainment options,” Kevin Westcott, vice chairman, Deloitte LLP and U.S. technology, media and telecom leader, said in the company’s report.

He added: “This requires consumers to ‘dance’ between services introducing frustrations as they try to manage multiple subscriptions and keep track of their favorite content. Media and entertainment companies with a deeper understanding of customer concerns about content, cost and ad-tolerance across all entertainment options and generations, can cultivate long-term relationships and reduce churn.”

With muddled marketing, ongoing consumer confusion, and a premium $15 price point, it remains to be seen if HBO Max can indeed cultivate the necessary long-term relationships required to survive the so called streaming wars. On Thursday, AT&T will report its Q1 earnings for the year, and the expected updates on HBO Max’s progress should prove illuminating in that regard.

HBO Max totaled 8.6 million activations by Q3 2020 and added 8.5 million new activations between Oct. 2020-Dec. 2020 to reach January’s figure of 17.1 million. In Q4, HBO Max captured 23% of all premium SVOD sign-ups, according to Antenna data. While the service is growing incrementally, it hasn’t been advancing fast enough to ameliorate Wall Street’s concerns about the rest of parent company AT&T in the same way that Disney+ covered for Disney’s flailing operations during the pandemic.

Since January, HBO Max has delivered multiple Warner Bros. pictures including Denzel Washington’s The Little Things, Best Picture nominee Judas and the Black Messiah, Tom & Jerry as well as Max original Zack Snyder’s Justice League. Most notably of all, box office smash hit Godzilla vs. Kong apparently became the most-watched show or movie in HBO Max history over the first four days of its availability, according to WarnerMedia streaming head Andy Forssell. New HBO Max originals such as Generation and Made For Love, as well as HBO programming, have also beefed up the service.

Given the infusion of new programming over the last four months and the promise of a Friends reunion special in the near future, we wouldn’t be surprised to see HBO Max add between 10 million and 13 million new subscribers in Q1. For comparison, Netflix set a quarterly record last year with 15.6 million new subs in one earnings period while Disney+’s current record for quarterly paid adds is 27 million. In March, AT&T raises its combined HBO Max and HBO subscriber targets to between 120 million and 150 million worldwide by the end of 2025.

With an advertising-supported tier rolling out this summer, analysts expect AT&T to announce AVOD pricing in the upcoming report. A more affordable HBO Max tier should theoretically help accelerate its expansion. But as Deloitte notes, retention and avoiding churn has become a crucial. What to Expect From HBO Max’s Growth in Q1