AT&T to Spend $2 Billion on HBO Max in 2020, Aims to Increase Budget in Subsequent Years
When it comes to streaming wars, media companies aren’t sparing any expenses. Just last week, a new study by MoffettNathanson revealed that when all is said and done, the streaming wars will cost Disney, Netflix and WarnerMedia $16 billion over the next four years, and it appears this figure is right on par.
According to Variety, AT&T is expecting to spend up to $2 billion on HBO Max in 2020 and investing an additional $1 billion in each of the following two years. This is before HBO Max even achieves profitability in 2025. The streaming service, which will launch in May 2020, will be “the key aspect of the video strategy going forward,” stated AT&T chief financial officer John Stephens at the Wells Fargo TMT Summit.
During their third quarter earnings call in October, AT&T chairman and CEO Randall Stephenson revealed the company would be putting a lot of power behind HBO Max. “HBO Max will become the workhorse for our video product as we move into next year,” Stephenson said. “All of the muscle and range of investment is going behind HBO Max.”
The company, which made it clear that they are not beyond selling DIRECTV as there are no “sacred cows,” mentioned that the “lion’s share of ads” will also be moving to HBO Max. WarnerMedia expects the new streaming service to hit 50 million subscribers within the next five years.
AT&T’s hefty budget for HBO Max goes hand-in-hand with that of Apple TV+ and Netflix. In August, the Financial Times reported that Apple had upped its content budget from $1 billion a whopping $6 billion. In October, it was also reported that Netflix was looking to raise $2 billion in debt in order to buff up their content budget. This was in addition to the $15 billion they slated for this year.