Deeper Dive—AT&T’s ‘Wonder Woman’ risk could pay off for whole business

Wonder Woman 1984 (Warner Bros.)

AT&T is taking a big risk by sending “Wonder Woman 1984” to HBO Max but it could potentially pay off across several segments within the business.

AT&T CFO John Stephens, speaking today at a Morgan Stanley investor conference, called the strategy a first for the industry. On Christmas Day, the sequel to 2017’s “Wonder Woman” will hit theaters in the U.S. and simultaneously launch on HBO Max, where it will be available to subscribers at no extra charge for the first month of its release.

For theaters, who Stephens said are starved for good content, the sequel fills a need during a difficult and uncertain time.

“By the same token, to make it work for us, it certainly provides us a great opportunity to showcase HBO Max and to have a lead invitation for people to come and not only use HBO Max to watch ‘Wonder Woman 1984’ but then to realize the great depth and quality and, quite frankly diverse content that’s available there,” Stephens said. “It’s a win-win in a difficult situation. It’s a win-win for all of us.”

Stephens agreed that WarnerMedia will presumably get some good pull-forward on downloads and subscriptions while AT&T Wireless could benefit through customers upgrading to plans that include HBO Max. Warner Bros. still stands to make ticket sales when “Wonder Woman 1984” opens internationally on Dec. 16 and in the U.S. a little more than a week later.

Beyond that, the bold release plan could have positive effects within AT&T’s broadband and linear video businesses, too. AT&T TV Choice and above plans include a free year of HBO Max and the lure of a big ticket sequel could draw more DirecTV and U-verse subscribers to switch over to AT&T’s new IP-based video service. Likewise, HBO Max is included with AT&T’s 1 Gig/Fiber internet plans and the movie could potentially spark some upgrades.

On top of all that, the release strategy could demonstrate to consumers that AT&T is willing to meet them halfway. Lightshed analyst Rich Greenfield pointed toward a memo from WarnerMedia CEO Jason Kilar, who said that putting “Wonder Woman 1984” both in theaters and on HBO Max gives fans the “power to choose.”

“Putting consumers first is a big deal and has become both enabled and necessitated by technology. Yet, it is not something we hear from media company executives; historically, business models come first and consumers are an afterthought. That may have worked in a world of both limited distribution and content, but not anymore,” wrote Greenfield in a research note.

The first “Wonder Woman” made $820 million internationally at the box office but given the ongoing pandemic, it’s unlikely the sequel will get close to the $1 billion Warner Bros. was anticipating. By sending the movie to HBO Max, AT&T can make the best of the situation and perhaps make up for lost revenue in different ways.