HBO Max signed 2.4 million new subscribers in the US in the June quarter, while hundreds of thousands of Americans canceled their Netflix subscriptions, a sign of how Hollywood’s streaming battle has flared up.
The company had 12.1 million retail subscribers to HBO Max at the end of June, compared to 9.7 million at the end of March. This does not apply to people who have free access to the WarnerMedia service through their cable subscription.
In contrast, Netflix lost 430,000 subscribers in the US and Canada in those three months, feed worries that the streaming giant has lost ground to new entrants to the market it pioneered.
Netflix still has 74 million subscribers in the US and Canada, and 209 million worldwide, making it the streaming leader by a wide margin. But investors and analysts are concerned about the slowdown in North America.
“It should be clear by now that the US streaming market has become much more competitive,” said Michael Nathanson, an analyst at MoffettNathanson. “Netflix’s position as a first mover is clearly being tested,” he said, warning that “middle age appears to be setting in” for Netflix in the US.
In recent years, the largest traditional media groups have consolidated to gain weight as they try to reinvent themselves as streaming services and compete with Netflix. Disney purchased Fox for $71 billion, while AT&T purchased Warner Media for $85 billion.
AT&T agreed in May to: spin-off and WarnerMedia combine with rival Discovery, just three years after the company’s acquisition, to provide a humble Hollywood retreat for the telecommunications company.
The deal combined one of the most highly regarded portfolios in entertainment — including Warner Bros. film and television studios, the HBO network, and a portfolio of cable channels including CNN — with Discovery’s unscripted programming, whose brands range from sports and nature. to home renovation.
Netflix’s senior management dismissed HBO as a threat this week. Reed Hastings, co-chief executive, told investors that the Discovery-Warner combination was “not as significant” as Disney’s acquisition of Fox, adding that he had seen no impact from HBO on Netflix subscriber growth.
“Does HBO or Disney . . . have a different impact than before? We don’t see that in the [data]Hastings told investors. “That gives us comfort.”
Co-chief executive Ted Sarandos also criticized the Warner deal: “If I look at all these . . . consolidations, when are they one and one is three or one and one is four versus what most of them are: what is one and one is two?”
Over the past year and a half, Disney, Apple, WarnerMedia, Comcast, Discovery, and others have launched streaming platforms, with varying degrees of success.
Warner launched HBO Max in the US last year for $15 a month and expanded to Latin America in late June. The service has reached 12 million direct signups and a total subscriber count of 47 million for both HBO and HBO Max. This is well below rival Disney, which reached 104 million subscribers to the Disney Plus service in May.
HBO’s subscriber growth helped WarnerMedia’s revenue in the quarter to $8.8 billion, up 31 percent from a year ago, and ahead of Wall Street’s $8.4 billion forecast.
Parent company AT&T posted a net profit of $1.9 billion on revenue of $44 billion. AT&T shares rose 1.6 percent in pre-market trading.