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HBOMAX 2022 growth still heavily skewed to the US

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The Wakeup

HBOMAX 2022 growth still heavily skewed to the US

Sean McNulty
Apr 21, 2022
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HBOMAX 2022 growth still heavily skewed to the US

theankler.com

First, let’s pour one out for AT&T’s last earnings call to include WARNER MEDIA info 🍾. They will now return to basically being a phone company… and I won’t have to get up early to report on AT&T’s Q2 earnings call. Everybody wins.

Now the Numbers of importance from the Q1 2022 AT&T Earnings call:

HBOMAX SUBSCRIBERS: 76.8 Million Global (+3 Million since January), 48.6 Mil US (+1.8 Million since Jan).

Meaning… their US growth far surpassed International growth (almost 2 to 1), which isn’t great considering HBOMAX’s international footprint at this point is substantial and just expanded again in the later part of Q4.

  • WORTH NOTING: HBOMAX discounted their US product quite a bit in Q1 with a 20% off sale in January for $8 a month (thanks btw!). And cue….👇

US AvgRevenuePerUser #ARPU: $11.24 a month, that’s down about -4.5% vs. a year ago.

  • Of note - amongst all the NETFLIX piling on yesterday, unlike HBOMAX - their ARPU has continued to grow quarter after quarter… and they never discount their product.

  • A subtlety that I’m sure Wall Street will completely ignore.

INFO AT&T DOESN’T SHARE (also unlike NETFLIX):

  • Breakdowns of subscribers by global region, with accompanying ARPU.

  • A projection of the direction HBOMAX subs will go in Q2.

WARNER MEDIA

Revenues: $8.7 Billion (+2.5% from a year ago, and about $800 Million more than NETFLIX).

  • HOWEVER: Profits: -32% vs. last year to $1.3 Billion. Creating CNN+ and making a new “GOT” isn’t cheap. This is $200 Million less than NETFLIX.

TAKEAWAY

This is fine. There is growth… even though a good deal of it likely came from discounting the product, and recent Q4 2021 expansion into some new territories in EUROPE (incl SPAIN) and LATAM (ie levers NETFLIX can no longer or just does not pull).

But assuming there will be no repeat HBOMAX discounting in Q2… and a programming lineup that includes a lot of returning favorites (“Hacks”, “The Flight Attendant”), but not a lot of new series or big movies to bring in new subscribers - this is the quarter to watch.

The new “GOT” series should help turn around any dips in Q3 (August launch).

BUT: The perception of HBOMAX on Wall Street will change in Q2.

HBOMAX / WARNER MEDIA is now tucked into a phone company with revenues 5X bigger than theirs. AT&T’s earnings call is about 95% phone biz talk #superExciting

WBD / “WARNER DISCO” will be judged primarily on the success of HBOMAX (and DISCO+). So any not-so-great news will be amplified, even though it may not be materially different than anything when it was part of AT&T, as will their finances…

So - passing grade on Q1, but big ?? hang over Q2.

SMALL CAVEAT ON HBOMAX SUBSCRIPTION #s: Unlike other streaming services - these numbers indicate everyone who has access to HBOMAX…. not necessarily everyone who has actually signed up for an account or used it in the past 3 months.

  • Ie. It includes HBO cable subscribers who still haven’t signed up for HBOMAX even though they have free access. No indication as to what that number is. But in the spirit of “ya pay for it… so who cares if ya use it”, it makes sense as a metric.

  • Also does not include free trial accounts.

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HBOMAX 2022 growth still heavily skewed to the US

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