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HBO Max Movie Releases Aren't Hurting the Warner Bros. Box Office

By Rich Duprey - May 11, 2021 at 8:45AM

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But that may be because 2021 is a unique year for movies.

The phenomenal success Disney (DIS -0.11%) enjoyed with Disney+ in its first year of operation changed the way everyone looked at streaming video services. It meant every other studio launching its own platform needed to give its service some kind of hook to stand out from the tsunami of streaming services flooding the market.

AT&T (T 0.05%) chose to have its Warner Bros. studio release this year's entire slate of films on HBO Max on the same day they were delivered to theaters (known as a day-and-date release), despite fears that it might potentially undercut box office revenue. That doesn't seem to have happened, however, and the controversial decision may have been a very smart one to make.

Godzilla v. Kong movie image

Image source: Warner Bros.

Starting to tune in

HBO Max subscriber count is growing. AT&T reported last month that the streaming video service had 44.2 million subscribers at the end of the first quarter, a sequential gain of 2.7 million users. The numbers are fudged a bit, since AT&T includes in that total legacy HBO subscribers who have access to the streamer but have yet to actually download the app. But once AT&T migrates all those people into the streaming services subscriber base total, any growth it reports afterwards will be real gains.

AT&T now believes it can have as many as 150 million subscribers by 2025, making it a laggard if you just compare it to Disney+, which already has over 100 million subscribers today. But it's a standout nonetheless, in positioning itself as a service movie viewers will want to tune in to.

There are a finite number of streaming services people will sign up for. Driven by cord cutting to lower their monthly cable bill, consumers initially signed up for Netflix (NFLX 1.67%) and a handful of other services to get their movie quotient filled.

Yet as more studios gave the green light to launch their own streaming services, and even cable companies themselves got into the act, Netflix started seeing content pulled from its service. Disney, for example, removed most of its programming from Netflix, including its popular Marvel comics films. Other studios began following suit. And Comcast (CMCSA -1.66%) is reportedly mulling over whether to pull Universal Pictures content from Netflix and HBO Max. 

Even so, subscription fee creep is going to cause consumers to make some hard choices about the services they want to keep, which is why HBO Max getting all of the Warner Bros. movies for 2021 is proving to be a shrewd move.

A monster opportunity

Warner Bros. is dominating the box office this year with five of the top 10 highest-grossing movies so far. Its Godzilla v. Kong is the biggest hit of the year so far with $89.6 million in domestic receipts, surpassing second place Tom and Jerry (also a Warner Bros. film) by more than two-to-one. 

This year is certainly unique in that movie theaters aren't able to operate at full capacity. Also, while AMC Entertainment and Cinemark have been open since last summer (albeit initially with very limited seating), Regal cinema parent Cineworld only recently reopened after having received commitments from studios that they would be releasing films to theaters. 

So $90 million for the No. 1 film four months into the year would normally be a dismal showing, but it's a remarkable achievement in the current climate. And releasing movies simultaneously in theaters and on HBO Max doesn't seem to be hurting either venue.

Quantity over quality

Of course, AT&T's Warner Bros. hasn't really had much in the way of competition this year. The anime film Demon Slayer: Mugen Train took over the No. 1 position from Godzilla vs. Kong this past weekend, ending its four-week reign.

That means just two movies that led box office receipts this year were not animated, kids, monster, or superhero films. Folks, this is not Oscar-worthy material we're seeing.

While better movies are coming (yes, that's a subjective claim), and AT&T isn't disclosing just how many subscribers each of its films are luring to HBO Max, it seems clear that the day-and-date release schedule is serving its purpose of giving the streaming service the early subscriber boost it needs to be competitive.

Rich Duprey owns shares of AT&T. The Motley Fool owns shares of and recommends Netflix and Walt Disney. The Motley Fool recommends Comcast. The Motley Fool has a disclosure policy.

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Stocks Mentioned

AT&T Inc. Stock Quote
AT&T Inc.
T
$18.43 (0.05%) $0.01
The Walt Disney Company Stock Quote
The Walt Disney Company
DIS
$122.67 (-0.11%) $0.14
Netflix, Inc. Stock Quote
Netflix, Inc.
NFLX
$245.17 (1.67%) $4.02
Comcast Corporation Stock Quote
Comcast Corporation
CMCSA
$38.61 (-1.66%) $0.65
Cinemark Holdings, Inc. Stock Quote
Cinemark Holdings, Inc.
CNK
$17.04 (-0.70%) $0.12
AMC Entertainment Holdings, Inc. Stock Quote
AMC Entertainment Holdings, Inc.
AMC
$19.29 (-9.69%) $-2.07
Cineworld Group plc Stock Quote
Cineworld Group plc
CNNW.F
$0.12 (-4.90%) $0.01

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