DALLAS, Texas – In October of 2019, it was revealed that AT&T intends to invest $2 billion to produce content for HBO Max come 2020. After this primary investment, AT&T is to commit an additional $1 billion, to be parcelled out as needed from 2021 to 2022.
In a statement made to Variety magazine, AT&T’s expectation following these expenditures is for HBO MAX to turn a profit by 2025.
Further, AT&T hopes that HBO Max will gain up to 90 million subscribers by 2025, with 50 million of these subscribers from the United States. AT&T bases these expectations on the current subscriber count of their pay TV service, which amounted to 134 million in 2017. Of these, 54 million were from the US.
The efforts to entice migration to HBO Max, aside from expanding into the increasingly profitable cord-cutting market, will also result in net savings for AT&T, as they would no longer have to pay cable companies a percentage of their profits to deliver their content to the viewership.
This 2025 goal of 90 million subscribers has come under some scrutiny, however, given that AT&T’s starting price of $14.99 is a substantial amount more than other offerings at less than $10, such as those of Hulu and Disney+.
Still, AT&T’s large, dedicated subscriber base gives some credence to this projection. $14.99 is still significantly lower than most cable TV packages, which are often bundled with satellite service and amount to $107 per month on average.
AT&T’s revenue projections put HBO Max at $1 billion of incremental domestic income annually, to reach a yearly revenue of $5 billion come 2025. HBO says that this amount would include revenue from content, subscription and advertising put together.
Despite the surety that AT&T expresses and the credibility they possess to back up these claims, many analysts remain sceptical that AT&T will turn such a profit in a five-year timespan.