There is big money in streaming as Netflix has proven to the world. It can also come with some pretty sizable risks though as content needs to be purchased in advance of a streaming service going live to ensure that there is enough of it when you are ready to launch. An expensive risk which WarnerMedia is taking as the company has revealed they have lost more than a billion dollars in revenue from their investment in HBO Max ahead of its launch in May.
The company revealed the news as part of a quarterly earnings call with investors where they explained that the normal income they would have received for licensing some of their biggest shows to other networks has meant that they have lost out on that sweet billion bucks. The company is not licensing certain shows out anymore as it prepares to keep its content exclusive for their streaming service. Over time, all of their big content from top HBO shows to the likes of Friends and Big Bang Theory will only be available through HBO Max.
“We delivered what we promised in 2019 and we begin this year with strong momentum in wireless, with HBO Max set to launch in May and our share retirement plan well underway,” said Randall Stephenson, AT&T chairman and CEO.
Our 2020 outlook positions us to deliver meaningful progress on our 3-year financial and capital allocation plans as we continue to invest in growth opportunities and create value for our owners, as we did last year.
This loss is outside of the $4 billion the company is investing in new content for the streaming service. It is a massive gamble, though given the strength of their existing content and ability to create massive shows, one that you think should create a well-stocked library for HBO Max’s upcoming launch.
Last Updated: January 30, 2020
HvR
January 30, 2020 at 16:54
Investors should not worry Multichoice will make up the difference in licensing fees to ensure they keep their monopoly in Africa.