Advertisement
Australia markets closed
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • AUD/USD

    0.6524
    +0.0006 (+0.09%)
     
  • OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD

    2,254.80
    +16.40 (+0.73%)
     
  • Bitcoin AUD

    107,537.20
    -486.01 (-0.45%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • AUD/EUR

    0.6043
    +0.0009 (+0.15%)
     
  • AUD/NZD

    1.0904
    +0.0002 (+0.02%)
     
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NASDAQ

    18,254.69
    -26.15 (-0.14%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,807.37
    +47.29 (+0.12%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,369.44
    +201.37 (+0.50%)
     

Can AT&T Redefine Streaming Landscape With HBO Max Launch?

AT&T Inc. T is set to roll out its streaming service HBO Max today with an unrivaled bouquet of premium and exclusive content for an impressive direct-to-consumer experience across the age group. The much-publicized offering is likely to enable the company to gain a foothold in the subscription video on demand (SVOD) market, which includes the presence of avant-garde media firms like Netflix, Inc. NFLX, The Walt Disney Company DIS, Hulu and Amazon.com Inc. AMZN. The long-awaited launch seemed to strike the right chords with investors as the share price moved up 3.2% to close at $30.82 yesterday.

Stand Out in a Crowd or Me-Too Product?

With its commercial debut, HBO Max will offer about 10,000 hours of premium content, leveraging an extensive collection of exclusive original programs and the most sought-after shows from WarnerMedia’s vast portfolio of beloved brands and libraries. These include the exclusive streaming rights for popular shows such as Friends, The Fresh Prince of Bel Air and Pretty Little Liars. In addition, it will showcase programming from Warner Bros., New Line, DC Entertainment, CNN, TNT, TBS, truTV, The CW, Turner Classic Movies, Cartoon Network, Adult Swim, Crunchyroll, Rooster Teeth and Looney Tunes.

Will the Ploy Work?

AT&T is offering HBO Max at a monthly subscription rate of $14.99, which makes it costlier than Netflix's $12.99 standard subscription and $6.99 for Disney+. The company intends to introduce a cheaper ad-supported version sometime in 2021 but is yet to reveal the fine prints. In the meantime, AT&T aims to leverage various cross-promotional opportunities in its mobile, pay TV and broadband offerings to gain 50 million U.S. subscribers by 2025.

Although the target appears to be a bit stretched given its premium pricing, the fact that users are spending about eight hours, on average, on streaming content, with continued stay-at-home restrictions induced by the coronavirus pandemic, is likely to help the company achieve the target. Moreover, consumers seem to be ready to shell out more for subscription services as live gaming and entertainment options remain suspended.

Product Cannibalization?

AT&T has been ramping up its streaming services with the launch of live TV channels DirecTV Now in 2016 (presently known as AT&T TV Now) and a cheaper live-TV service WatchTV in 2018. With modest successes in both ventures and continued subscriber loss in the DirecTV satellite TV business as users tend to shift to Internet video services, AT&T intends to focus more on video streaming content. In particular, with the launch of AT&T TV, a new live TV service across the country, DirecTV has been relegated to the back-burner of its video subscription based pay-TV strategy. Moreover, it appears that the company is downplaying the cheaper alternative services as it aims to position AT&T TV as a premium streaming TV experience.

Per an August eMarketer forecast, more than one-fifth of U.S. households are expected to be cord-cutters by the end of 2021, and by 2022, the number is expected to swell to about 25%. Evolving consumer preference for digital and subscription services over linear pay television and rental or outright purchase has compelled various media firms to alter their business models. This Zacks Rank #3 (Hold) stock is possibly moving in that direction. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Moving Forward

With the launch of HBO Max, while continuing with HBO Now as a separate subscription-based streaming service, AT&T aims to bring stiff competition to its rivals within this space. The message seems to be loud and clear as Rasesh Patel, AT&T’s executive VP of broadband and video, observed, “Our lead TV products will be AT&T TV and HBO Max”. For the time being, DirecTV will be available but would not be actively marketed as the company is focusing more on its streaming business with the writing being clearly on the wall. 

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2021.

Click here for the 6 trades >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
ATT Inc. (T) : Free Stock Analysis Report
 
Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
The Walt Disney Company (DIS) : Free Stock Analysis Report
 
Netflix, Inc. (NFLX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research