Since launching HBO Max in May, AT&T (NYSE:T) has struggled to attract subscribers or even convince existing HBO subscribers to activate their account on the HBO Max app. As of early December, just 12.6 million of the 34 million or so eligible accounts had activated the new streaming service. The Christmas debut of Wonder Woman 1984 and the promise of more blockbuster releases in 2021 may have spurred more activations, but  AT&T and HBO Max still have their work cut out for them.

HBO Max home screen on tvOS, featuring a large image of Wonder Woman.

Image source: AT&T.

Still way behind the competitions' viewership

Fifteen percent of U.S. households reported subscribing to HBO Max by the end of 2020, according to a recent Civic Science survey. That's excellent progress from the 9% that self-reported at the end of June but still well short of the competition.

Even ViacomCBS's (NASDAQ:VIAC) Showtime had more subscribers, according to the survey. In mid-September, the company reportedly had 7 million Showtime over-the-top (OTT) subscribers (to go along with 20 million cable subscribers). That number likely climbed closer to 8 million with ViacomCBS's report of 17.9 million total streaming subscribers between Showtime and CBS All Access by the end of the third quarter.

Considering HBO has about 10 million more cable subscribers than Showtime, and it's investing in additional content for HBO Max that viewers can't find on HBO's linear network, it should be more popular than the competing premium cable network. 

One big hurdle for HBO may be its price. At $14.99 per month, it's the most expensive streaming service among the major offerings. Disney's (NYSE:DIS) Disney+ and Hulu, which can both be had for less than half the price of HBO Max, have more than twice as many subscribers, according to Civic Science. Disney reported that Hulu had 38.8 million total subscribers by the beginning of December, so it was actually three-times HBO Max's activations.

HBO is looking for an original hit

One of the biggest factors that drives people to sign up for a streaming service is original content. HBO Max hasn't quite found a series that broke through the crowded market for original content on streaming services. Six percent of survey respondents said HBO Max had the best original content of any streaming service. That includes its deep catalog of Emmy-winning HBO originals.

That's good enough for fourth place among major streaming competitors, but it's still well behind Netflix (NASDAQ:NFLX), which is the top choice for 62% of respondents.

More people preferred Disney+ originals over HBO Max. The Mandalorian was a huge success for the company, and its original series library will get stronger in 2021. Disney just released the first episodes of WandaVision, and there are more series coming this year based on the popular Marvel and Star Wars universes.

AT&T's decision to release its Warner Bros. films simultaneously on HBO Max and in theaters, known as a "day-and-date" release, may drive new activations in 2021. But the long-term plan for the media company is still to return to an exclusive theatrical window after the pandemic. At that point, it might not have the same draw as competitors with high-profile original releases.

For HBO Max to expand the audience of HBO, drive more of its linear network subscribers to its app (where it can collect valuable viewer data), and grow its subscription revenue, it needs more content. Not just original content, but series and films that resonate with a broader audience than the older HBO series.

Both Netflix and Disney reach very broad audiences. Disney was notably surprised with the appeal of Disney+ to households without children. During its investor day last month, Disney management said the company is catering more toward that audience going forward.

AT&T will report its fourth-quarter earnings later this month. Investors should pay close attention to HBO Max activations following the Wonder Woman 1984 debut. The number of retail subscribers will also indicate whether it's actually expanding the audience for HBO or if its merely giving existing subscribers additional content for no extra charge.