Entertainment consumption is swiftly moving toward cord-cutting, but HBO Max’s 2025 target profit date shows the risk of jumping into the streaming wars.
Variety reported the news of HBO Max’s hopes, and indicated the plan is to spend $4 billion total over the next three years. There’s no shortage of financial backing, so HBO Max has the luxury of a lengthy runway. AT&T’s merger with Time Warner guaranteed that.
However, massive content acquisition deals are flying off the shelves, and HBO Max has already been a big spender. It’s no wonder the starting subscription fee of $14.99 per month is way higher than the competition.
HBO brand tied strongly to TV
Between Friends, The Big Bang Theory and South Park, that’s three of the biggest TV shows ever.
HBO has enough of its own TV shows to not even bother dropping so much dough on other preexisting IPs. However, it seems that bold strategy is in line with what the corporate higher-ups want to do.
WarnerMedia even dished out a reported $500 exclusive deal with creative master J.J. Abrams. The hope is he and his production company, Bad Robot, can crank out hits for the new streamer.
This is a lot to take in. Abrams has developed legendary series such as Alias, Felicity and Lost, but dropping a country’s net GDP on him seems audacious. And I love Abrams! The Rise of Skywalker is going to rock!
Short-term losses for long-term gains: Max-ing out?
Competitors like Netflix and Amazon Prime Video have built business models on being in the red for years before turning a profit.
The key difference is Amazon stretched across numerous industries before venturing into entertainment. Netflix’s strategy looks good now that it has Oscar contenders galore among recent original films, yet their business model is of dubious sustainability.
Apple TV+ has similar firepower to Amazon and specializes in other industries. Apple has invested heavily in original programming, and has plenty to fall back on.
But while services like Apple TV+ and Disney+ are novelties, HBO Max is such a known commodity. What gives?
A generous self-projected subscriber rise
Well, what gives is HBO Max believes it’ll get as many as 90 million streaming subscribers worldwide by 2025, per the report. That’ll help foot the bill for their mass spending spree.
However, this seems like an overly optimistic projection. As Variety noted, HBO has but 34 million subscribers now. Leaning on an audience of iconic TV shows in-house and acquired for that much of a surge seems a little bonkers.
Then again, what do we know where everything is going? With the continued extinction of pay-TV plans, perhaps such a rise in subscription is in the cards. But HBO Max’s risky streaming plans show how uncertain — but exciting! — of a time it is in home entertainment.