AT&T expects 50M HBO Max domestic subscribers over next five years

HBO Max
HBO Max will eventually include livestreaming television. (WarnerMedia)

AT&T expects its upcoming HBO Max streaming service will attract another 50 million domestic subscribers in the next five years.

AT&T CEO Randall Stephenson, speaking Monday during his company’s third quarter earnings call, said that HBO Max will have a “very unique position” in the marketplace, and that AT&T is investing heavily in the HBO brand and working to bring lots of new content out.

“This is going to be meaningful business to us over the next four or five years,” Stephenson said.

HBO Max will be the primary SVOD service for AT&T in the future, and Stephenson said that over time HBO Max will also become the platform through which the company delivers livestreamed TV, which he said will help streamline AT&T’s video service portfolio.

“This thing gets more and more simplified and we ultimately get down to where we have two products: the traditional satellite, which will be there for a long time, and then our streaming product, which will be premised on the HBO Max platform,” Stephenson said. He promised more details tomorrow when AT&T hosts a WarnerMedia Day for analysts and investors.

RELATED: AT&T loses nearly 1.36 million video subscribers in Q3

AT&T’s long-term plans for simplifying its video business come as the company just experienced huge video subscriber losses in the third quarter. The company said that premium video losses have peaked after impact from blackouts in carriage disputes and continued roll off of promotional pricing customers.

Stephenson said there’s a little bit more of promotional pricing “cleanup” that will run into the fourth quarter but that video subscriber losses will significantly improve in the fourth quarter and get better in 2020.

He said that the DirecTV satellite service, which he said still produces more than $4 billion in free cash flow per year, will have a long life. But he reiterated that AT&T TV, the company’s upcoming streaming TV service, will be the primary vehicle for going to market.

Stephenson said that AT&T TV will begin to attract the lion’s share of gross subscriber adds over the next couple of years.

“That cannibalizes satellite. It replaces satellite. But we actually like if gross adds are coming on that product,” he said because AT&T TV has a lower cost point and allows the company to meet a much different price point in the market.

As AT&T begins to review its corporate strategy, Stephenson said there are no “sacred cows” in the company’s portfolio. He said again that DirecTV will continue to be an important part of AT&T’s business, but suggested that the company will explore partnerships and other options for the sagging satellite operator.

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