Executives at AT&T have quickly learned that building a streaming service to compete with Apple TV+ and Netflix isn’t going to be cheap. During the company’s latest earnings call, AT&T revealed that it has already lost $1.2 billion during the creation process of HBO Max that is set to launch this May.
AT&T says the $1.2 billion in losses came from foregone content licensing revenue it would have made by continuing to license its top shows to other services like Netflix and Hulu. WarnerMedia, which is owned by AT&T, is consolidating its best legacy shows such as Friends and Big Bang Theory.
HBO Max gears up for launch
Netflix paid about $100 million to keep streaming Friends through the end of 2019 but you’ll need an HBO Max subscription to watch it in 2020. AT&T has yet to announce pricing for HBO Max. HBO revenues were up 1.9% last quarter with gains in subscribers.
During AT&T’s call with investors yesterday, WarnerMedia CEO John Stankey boasted that HBO MAX will be the “highest-quality premium SVOD [service] in the market with a great experience, better curation, and higher percentage of culturally relevant offerings than competing products.”
AT&T plans to be pretty aggressive with its HBO Max marketing. Some AT&T unlimited plan customers may even get a free trial. Giving away content could be key to getting eyeballs on the service early. Still, AT&T will need to draw in new customers too if it wants to compete with the bevy of streaming services already in business.