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BLEEDING DRY

As AT&T’s cord-cutting losses mount, its HBO Max streaming service can’t get here fast enough

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HBO
Time to let go.
  • Adam Epstein
By Adam Epstein

Entertainment reporter

Published Last updated This article is more than 2 years old.

AT&T lost more than a million TV subscribers in the third quarter this year, the company reported today (Oct. 28). It was the seventh straight quarter in which AT&T lost more TV customers than it did in the quarter before.

Profits and revenues for the telecommunications giant’s video unit were also down from the same period last year. AT&T is far from the only company to be hit hard by cable subscribers cutting the cord, but as the biggest television provider in the US, its stake in traditional TV is bigger than most.

So AT&T has to figure out a way to retain its existing TV customer base (about 20.5 million subscribers between DirecTV, which the company bought in 2015, and its U-verse brand) before there aren’t any of them left.

One way to do that, AT&T thinks, is to convert those people to streaming.

“We didn’t buy DirecTV because we love satellite,” AT&T COO John Stankey told Reuters last week. “We bought DirecTV because we love the customer base and the customer base could be migrated into more on-demand-oriented products and services.”

Taking Stankey at his word, AT&T bought DirecTV four years ago knowing that it’d eventually buy a content company like WarnerMedia to help lure pay-TV customers into new services—like, say, a streaming platform. AT&T will launch HBO Max, its Netflix competitor, early next year.

The owner of HBO and the Warner Bros. movie studio, WarnerMedia is one of the biggest entertainment companies in the world. It provides more than enough content to sustain a streaming service (which is likely to be reflected in HBO Max’s price, rumored to be slightly higher than the $15 per month that it costs to subscribe to standalone HBO).

AT&T and other TV providers first tried to stave off the bleeding by launching internet-based “over-the-top” services aimed at Americans who had either already cut the cord or never paid for TV in the first place. These were lighter, sometimes cheaper versions of traditional TV bundles, except delivered online rather than via cables or satellites.

Results on these services have been mixed (none of the major ones, including Hulu Live, Sling TV, and Playstation Vue, have more than 3 million subscribers). And now AT&T’s version, AT&T Now, is bleeding subscribers too. It lost 195,000 customers this quarter—the fourth quarter of losses in a row. AT&T Now has only 1.1 million subscribers in total three years after launch.

This suggests that the unwieldiness of cable and satellite TV subscriptions wasn’t the only thing that caused customers to cut the cord. Younger consumers may simply be uninterested in the TV channel experience of old, even if it’s delivered over the internet.

AT&T is forecasting 50 million subscribers to HBO Max in the US by 2025. If it does hit that mark, it’d make the ongoing collapse of the company’s pay-TV empire a bit more palatable.

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