HBO Max Could Add $4 Billion In Incremental Revenues For AT&T By 2024
AT&T (NYSE:T) is expected to launch its new streaming service, HBO Max in May 2020, taking on the likes of Netflix, Amazon, and Hulu in the streaming market. While AT&T already offers some streaming services such as HBO Now, HBO Max is likely to be more significant as it will include a sizable library of content from not just HBO but also Warner Bros, Turner Broadcasting, and the DC Universe. AT&T has also indicated that it will invest an additional $4 billion in content for HBO Max over the next ~5 years. We estimate that the service could add incremental U.S. revenues of about $4.3 billion for AT&T by 2024. For perspective, AT&T is likely to post revenues of about $187 billion in 2019, with its Media operations likely to post revenues of over $35 billion.
View our interactive dashboard analysis on What’s The Revenue Potential For AT&T’s HBO Max Streaming Service In The U.S.?
A Closer Look At The Streaming Video Market In The U.S.
- How Will An Expanding Postpaid Phone Business Drive AT&T Stock’s Q1 Results?
- Down 50% From 2021, We Think There’s Upside For AT&T Stock
- Will AT&T Stock See Gains Post Q2 Results?
- At $15, AT&T Stock Appears Oversold
- AT&T Stock Held Up In A Tough Market. What Does 2023 Hold?
- What’s Happening With AT&T Stock?
- While Netflix had over 60 million U.S. subscribers as of 2018, Amazon’s Prime offering, which includes a video service, has over 100 million customers. Hulu had about 25 million subscribers.
- Hulu’s monthly ARPUs are the highest, standing at an estimated $13 in 2018, driven by its ad-supported model, followed by Netflix at about $11 and Amazon Prime at $10.
- Amazon Prime generates the highest revenues, estimated at about $12 billion in 2018, followed by Netflix and Hulu, which posted U.S. revenues of $7.6 billion and $4 billion, respectively.
- Amazon Prime remains tops in terms of U.S. household penetration with about 79 % of U.S. households opting for the service in 2018, followed by Netflix and Hulu at ~48% and 20%, respectively.
Estimating Revenues From HBO Max
- HBO’s TV channels reach about ~140 million global TV subscribers and the company offers the HBO Now service as an a la cart streaming option with exclusive HBO content. It’s likely that HBO Now users will get access to HBO Max – which will have a larger library of content -at no extra charge.
- We estimate HBO Max’s incremental revenue potential by looking solely at the new customers that the new HBO Max service could bring in.
- We estimate that HBO Max will see adoption by 8% of U.S. households by 2020, with the number rising to 16% by 2024, translating into a paying subscriber base of 10 million by 2020 and 21 million by 2024.
- At an ARPU of $15 per month in 2020, rising to $17 by 2024, we estimate that HBO Max will generate revenues of about $2 billion in 2020, with the number rising to close to $4.3 billion by 2024.
For more information and charts on how we estimate HBO Max revenue, view our interactive dashboard analysis.
What’s behind Trefis? See How it’s Powering New Collaboration and What-Ifs
For CFOs and Finance Teams | Product, R&D, and Marketing Teams
Like our charts? Explore example interactive dashboards and create your own.