AT&T Earnings Q1 Analysis: HBO Max Grows Little by little But Steadily

HBO Max Subscribers AT&T

How is HBO Max executing in the streaming wars? Dogukan Keskinkilic/Anadolu Agency by using Getty Image

HBO Max subscription growth arrived in very well under anticipations in AT&T’s Q1 earnings report, though it’s not precisely a doom-and-gloom situation for the corporation. As usually, the better context paints a clearer picture.

According to AT&T, HBO Max and HBO combined for 44.2 million U.S. shoppers by the close of March, up 2.7 million paid customers from the 41.5 million the two totaled at the stop of previous 12 months. The enterprise declined to present activation numbers, or those who are eligible to transform existing HBO subscriptions into HBO Max activations. Nonetheless, the greater part of these Q1 provides were being retail, which suggests directly via HBO Max and not an current HBO subscription. HBO’s retail foundation grew 41%.

When the release of Zack Snyder’s Justice League and Godzilla vs. Kong was envisioned to catch the attention of extra new subscribers, HBO Max is nonetheless on speed for far more than 11 million new buyers in 2021. The streamer may perhaps not be generating the very same kind of gaudy expansion figures as Disney+, but AT&T uncovered in its earnings that common revenue for every person (ARPU) for domestic HBO Max and HBO buyers in Q1 was $11.72 for every thirty day period. For comparison, Disney+ ARPU stands at $4.03 as of the finish of 2020 even though Netflix’s U.S. and Canada ARPU was $14.25.

“I would anticipate AT&T’s [stock] motion on Thursday and further than to be significantly less about handheld gadgets or dividend payments and more about HBO Max’s subscriber expansion.” –David Keller

“Even however AT&T includes numerous organizations, the authentic dilemma buyers will be striving to answer is the growth potential for HBO Max,” David Keller, Chief Sector Strategist at, instructed Observer. “Given the way Netflix reacted to underwhelming subs, I would assume AT&T’s movement on Thursday and outside of to be considerably less about handheld equipment or dividend payments and more about HBO Max’s subscriber growth. AT&T a short while ago bounced off its 50-working day relocating average and a split earlier mentioned resistance all-around $31.50 would counsel even more upside potential.”

AT&T CEO John Stankey explained that HBO Max continued to supply strong subscriber and income growth in progress of the platform’s global and AVOD launches in June. On paper, a reduced priced tier ought to develop Max’s probable access. Domestically, the SVOD marketplace is instead saturated, so rolling out in overseas locations need to goose quarterly subscriber figures, assuming the product is nicely obtained.

As Netflix alone observed in its Q1 earnings report, raw subscriber figures are not the only conditions with which to choose a streaming services. A single have to also search at the economics included. AT&T defeat Wall Street economic expectations when it documented $43.9 billion in income and altered earnings for every share of 86 cents. WarnerMedia claimed that Q1 2021 profits was $8.5 billion, up 9.8% compared to Q1 2020 (while that also displays partial restoration from COVID-19). Importantly, direct-to-client membership income this quarter was up from $1.3 billion last 12 months to $1.8 billion, a 35% climb yr-in excess of-year.

Primarily based on AT&T’s earnings report, although, we can estimate that HBO Max offers approximately 10 million U.S. retail subs when HBO properties roughly 30 million wholesale subs. The total range of subscribers is growing. But a far additional illuminating and constructive metric would be to see an escalating variety of wholesale subscribers migrating to HBO Max. The actuality that AT&T declined to update activations implies that conversion amount of present HBO subs into Max subs could be rising. But it is significantly from a supplied.

“HBO Max has gained traction this quarter with a constant enhance in its subscriber base,” Anthony Denier, CEO of Webull, a fee-cost-free buying and selling system, told Observer. “WarnerMedia’s CEO predicted HBO Max will see significant advancement this 12 months just after a rollout to 60 marketplaces in Latin The us and Europe. By the end of 2021, AT&T expects to see throughout the world progress of involving 10% and 15%.”

As of January 27, HBO Max had 17.1 million activations. General, the service’s Q1 development in phrases of uncooked paid out additions is properly below expectations. But the context surrounding these figures does reveal a assistance generating incremental progress and solid ARPU.

AT&T’s Q1 Earnings Raise More Questions Than Answers for HBO Max