The battle for the superior streaming service will be fought in boardrooms and banks. As Hollywood’s biggest companies and studios turn their eye to streaming platforms, they’re also emptying their wallets with the knowledge that these platforms won’t be profitable for at least several years.
But that won’t stop AT&T, which last year acquired WarnerMedia in a massive merger, from spending upwards of $2 billion on its forthcoming streaming service HBO Max. That’s big bucks from any perspective, but how do those HBO Max costs compare to the costs of its rival new streaming platforms, Disney+ and Apple TV+?
Variety reports that AT&T plans to spend between $1.5 billion to $2 billion on HBO Max next year. Another $1 billion will be spent in both 2021 and 2022 before HBO Max is expected to finally turn a profit in its fourth year. It’s a costly gamble for the telecommunications company, but one that is becoming par for the course with any new streaming platform.
HBO Max will become the main focus or the “workhorse” for AT&T’s video business starting next year, AT&T CEO and chairman Randall Stephenson told investors on an earnings call.
These costs aren’t surprising considering the costly deal that WarnerMedia made to acquire the streaming rights to Friends, which had proved lucrative to Netflix over the years. The streaming service will include an archive of Warner Bros.-owned movies, but the real costs come in the form of the new original titles.
AT&T and WarnerMedia have not yet revealed the monthly subscription price for HBO Max yet, but it’s anticipated to be the most expensive of the new streaming services, with the price likely exceeding $14.99, which the company currently charges for HBO. However, AT&T will be making use of its wide customer base to try to boost first-year subscriptions to HBO Max, which the company aims to bring up to 50 million subscriptions by 2025, Stephenson said. “This is not Netflix, this is not Disney… It’s going to have a very unique position in the marketplace.”
But spending-wise, HBO Max does have a few things in common with Disney and Apple.
How Does it Compare to the Disney+ and Apple TV+ Costs?
Though Disney+ has some of the most anticipated high-profile titles, Disney’s spending on its forthcoming streaming service is less than the HBO Max costs, with Disney “projecting a 2020 original content budget short of $1 billion.” This seems inaccurate considering the high budgets for its biggest shows — The Mandalorian reportedly costs $15 million per episode, while The Falcon and the Winter Soldier, WandaVision and Hawkeye could run as much as $25 million per episode — but Disney’s endless archive and its emphasis on documentary series are probably helping the House of Mouse spend on the cheap. However, we can probably expect Disney to take longer to turn a profit due to its comically low monthly price of $4.99.
But AT&T’s spending on HBO Max pales in comparison to how much money Apple is pouring into its streaming service. The tech company is reportedly spending $6 billion on its initial lineup of TV shows, documentary series, and other originals — triple what HBO Max and Disney+ will cost their companies. But AT&T notably doesn’t have an archive of titles to fall back on, which means its service is starting from scratch. But perhaps that gamble will pay off, as positive reviews for the new Apple TV+ shows are starting to trickle in.
Apple TV+ launches November 1, 2019. Disney+ launches on November 12, 2019. HBO Max trails in after both with a planned Spring 2020 launch.
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