HBO and HBO Max notch 47 million domestic subscribers

HBO and streaming service HBO Max now reach 47 million domestic customers.

Telecommunications giant AT&T disclosed the number Thursday, saying its HBO premium cable channel and HBO Max unit had gained 2.8 million domestic subscribers during the second quarter — showing steady growth in an increasingly crowded streaming market.

The HBO brands now have 67.5 million customers worldwide. In late June, the company launched the service in Latin America.

“People have been responding well, we are growing, and you will see more growth outside of the U.S.,� Andy Forssell, general manager of WarnerMedia’s direct-to-consumer businesses, said in an interview. “Our programming has been really strong.�

HBO released the hit “Mare of Easttown,� and HBO Max also benefited from the addition of five theatrical movies, including “Mortal Kombat� and “In the Heights,� during the second quarter.

Stocking the service with feature films was part of WarnerMedia Chief Executive Jason Kilar’s controversial strategy to release Warner Bros.’ entire 2021 slate on HBO Max on the same day the films arrive in theaters. Next year, Warner Bros. plans to release 10 films on HBO Max the same day they arrive in theaters.

But premium television shows, including “Mare of Easttown,� have proved to be a major draw, Forssell said.

HBO Max’s progress comes on the heels of AT&T’s decision to jettison its entertainment company, WarnerMedia, just three years after AT&T paid $85 billion to buy it. AT&T plans to spin off WarnerMedia to rival cable programming company Discovery, a $43-billion transaction expected to finalize next year.

AT&T, based in Dallas, needs to pay down a crushing mountain of debt. Under pressure from investors, it has said it will focus on its core wireless business in a competitive phone market. AT&T also is spinning its troubled DirecTV business into a joint venture with private equity firm TPG. That transaction should occur this year.

In the recent quarter, WarnerMedia rolled out an advertising-supported plan for HBO Max.

Since HBO Max’s May 2020 launch, the unit has gained 10.7 million customers.

It has become one of the industry’s most popular streaming services and, because of its higher price of $14.99 a month, generates a higher rate of revenue per subscriber than Disney+ and Hulu, according to the MoffettNathanson research firm.

AT&T said domestic HBO Max and HBO collect an average of $11.90 a month in revenue per subscriber. In a recent report, MoffettNathanson estimated that industry leader Netflix collects an average of $14.88 a month in revenue per subscriber. Disney+ ranks lowest in terms of revenue per user, generating an average of $6.32 a month, MoffettNathanson found.

AT&T said Thursday that HBO Max has 12 million retail customers and an additional 31.5 million wholesale customers, which include subscribers who have both the HBO television channel and HBO Max subscriptions. The legacy HBO business has nearly 3.5 million customers.

Helped by HBO, WarnerMedia revenue increased 30.7% to $8.8 billion in the second quarter, reflecting a return to a more normal environment. A year ago, WarnerMedia suffered from the loss of live sports, closed theaters and an interruption in TV and movie production. WarnerMedia generates $4 billion from its subscription businesses, which also include the Turner channels and CNN.

The company posted operating income of $1.7 billion in the quarter, a 11.3% decline from the previous year. Higher revenues were more than offset by the company’s investments in HBO Max and higher sports costs.

The company now expects to have as many as 73 million global HBO Max and HBO subscribers by year’s end.

“In the end, you are going to live or die by whether your programming team is killing it,� Forssell said. “And our programming teams have been killing it.�