Blame AT&T for Warner Bros.' Controversial HBO Max Plan

Telecom giant has different priorities, Edmund Lee argues
By Evann Gastaldo,  Newser Staff
Posted Dec 9, 2020 12:07 AM CST
Blame AT&T for Warner Bros.' Controversial Strategy
This image released by Warner Bros. Pictures shows Gal Gadot as Wonder Woman in a scene from "Wonder Woman 1984."   (Clay Enos/Warner Bros Pictures via AP)

Theater chains and big Hollywood names are furious at Warner Bros.' plan to simultaneously release all of its 2021 movies at theaters and on HBO Max, the streaming service owned by WarnerMedia. At the New York Times, Edmund Lee has an explanation for the controversial move: AT&T owns WarnerMedia after acquiring Time Warner last year, and the telecom giant is much more interested in its wireless business than its entertainment business. After all, AT&T's wireless division makes triple the pretax profit WarnerMedia does. As such, it's very important to AT&T to keep those customers and to entice new ones away from T-Mobile and Verizon. One of the ways it does so is by offering HBO Max for free to certain subscribers. The streaming service "exists, in part, to create consumer loyalty to AT&T," Lee writes.

"Every 0.01% of customers who stay glued to AT&T are worth about $100 million to the company," he explains. As for how exactly Warner Bros. plans to make up the loss of revenue it would typically have gained from the theatrical releases, Lee estimates it would need to entice 5 million more people to sign up for HBO Max (above and beyond the 25 million new subscribers it's on track to gather by May regardless), or alternatively, entice 60 million people to subscribe for one month (and then, theoretically, cancel after watching whatever movie they wanted to see). HBO Max is the most expensive streaming service, at $15 a month, and so far it's lagging behind competitors Netflix (201 million customers), Disney+ (73 million), and Hulu (37 million) with just 12.6 million subscribers. See Lee's full piece for more, including the WarnerMedia CEO's history with Hulu. (Read more Warner Bros. stories.)

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