Hollywood Torrent: AT&T goes ‘all-in’ on HBO Max as its TV business crumbles

Hollywood Torrent From FOLLOW US SUBSCRIBE   Good afternoon from Los Angeles, wherever you may be. AT&T invited investors, analysts and reporters to Stage 21 on the Warner Bros. lot Tuesday for a showcase of its upcoming streaming service HBO Max, and the phone company wanted guests to leave with one message: "we're all-in." Not kinda in, like Comcast's Peacock. Not tangentially in, like Apple TV+. All-in, like Netflix and Disney. The programming lineup for HBO Max will include all of HBO's TV shows and movies, a deep catalog of old movies and TV shows, as well as loads of originals—all for the same price as HBO, $14.99. That is expensive relative to the competition (see the below chart), but cheaper than the company had been signaling. AT&T will spend up to $2 billion on HBO Max next year, and expects the service will lose money for a couple years before turning profitable in 2025. While AT&T didn't say the word Netflix very often, its top executives took several shots at the streaming service that shall not be named. Bob Greenblatt said HBO would use humans to help guide viewers to new shows (not that stupid algorithm!), while his deputies stressed the superiority of releasing new episodes of a show gradually instead of all at once (screw you binge viewing!). The presentation left me with a few immediate thoughts: That's a lot of stuff. HBO Max has the most robust programming of any streaming service. It has the best dramas and comedies of HBO ("Game of Thrones," "Sex and the City," "The Wire") and animation from Adult Swim ("Rick and Morty"), Studio Ghibli ("Spirited Away") and the whole "South Park" catalog. It has TV classics like "Friends" and "The West Wing," as well as an excellent catalog of movies ("The Matrix," "Wonder Woman" and "Bridesmaids"). Finally, it has a bunch of originals we know little about (including a drama series directed by Ridley Scott and a new series from Issa Rae). Between HBO and HBO Max, the service will have more than 80 original series in 2021, a pace of more than one a week. There will be little reason for viewers to cancel, if they sign up in the first place. Speaking of signing up.. Marketing the service will be a challenge. It should be easy for AT&T to convert existing HBO customers to buy the same product with even more stuff. But is that the pitch for the people who don't pay for HBO?   A lot of people are already exhausted by the volume of new TV shows, and the dizzying array of places to watch them. The TV industry released more than 500 scripted series last year, a number that will pass 600 in short order. Netflix and Hulu had the benefit of being first. Disney+ has all the Disney brands. Apple TV+ is basically free. What helps HBO Max stand out? The international rollout suggests AT&T is not exactly all-in. HBO Max will roll out in Spanish-speaking Latin America, Central Europe and the Nordics in the next couple of years. What's missing? Brazil. The United Kingdom. Canada. Australia. Those are four of Netflix's 10 biggest markets. AT&T doesn't want to forego the very healthy money it gets licensing all of HBO's programs to local TV networks. Economically, it makes sense. Strategically, it means HBO Max is not a global product.   The pay-TV business is only getting worse In case you need a reminder of why AT&T is bothering with HBO Max, take a look at this note from analyst Michael Nathanson. The headline:  What's even worse than "Freaking Ugly"?  Cord-cutting is accelerating at rates that exceed analysts' predictions. AT&T, Verizon, Comcast and Charter lost a combined 1.7 million pay-TV customers in the quarter, most of them from AT&T/DirecTV. Digital TV packages, once thought to be the future, are not.  Sony shut down PlayStation Vue, its "skinny bundle," while AT&T Now lost thousands of customers. Just look at this chart: That decline in subscribers for pay-TV packages affects TV networks that collect money for each subscriber, known as affiliate fees. Affiliate fee growth is slowing from high single digits in recent years to low single digits now.  TV ad sales aren't growing at all. National TV ad sales declined almost 3 percent through the first 8 months of the year, and are down about 1.5 percent so far this TV season, according to Standard Media Index.   Critics love 'The Irishman,' but theater chains hate Netflix Martin Scorsese's "The Irishman" opened in select theaters Friday. Kenneth Turan calls it "a revelation, as intoxicating a film as the year has seen." He's not alone. The film sports a 97% rating on Rotten Tomatoes, and a 95 on Metacritic. But not everyone is thrilled. The head of the National Association of Theater Owners called Netflix's release plan a "disgrace" because Netflix will release the film in theaters for just a few weeks before making it available on its service. Major theater chains wanted the company to keep it off the internet for at least two months. Netflix offered 45 days, according to Nicole Sperling. My two cents: I get why theater chains are against it. But if a movie studio thought "The Irishman" could make money in a traditional release, Paramount never would have let it get away. Netflix was willing to step forward and foot the $170 million budget, trusting more people would watch it if the movie was made available in living rooms around the world.  True cinephiles will still go to the theater. (I was watching it as this email landed in your inbox.) Speaking of purists getting made at Netflix, filmmakers aren't thrilled with the company after it confirmed a test that allows viewers to watch TV shows and movies at a sped-up pace on mobile devices. The test allows users to speed up and slow down video, as they already can on, say, a DVD player. But outrage is fun! By the numbers The No. 1 movie in the world is "Terminator: Dark Fate." The reboot of the science fiction classic grossed $29 million in North America, a paltry sum for a film that cost $185 million to produce. Overseas markets will often save poorly reviewed action films, but that won't be the case here. The movie is off to a so-so start overseas, including a $28 million opening in China. The No. 1 TV show last week was the World Series. Fox benefitted from a long series. Game 7 was the most-watched baseball game since the game 7 two years ago. But it was still the third least-watched World Series ever, averaging 13.91 million viewers. The week that was Apple TV+ debuted! Critics don't like the first four shows, which is a problem when you have nothing else to offer. But Joe Adalian has a look at why original shows are just one part of a larger strategic shift at Apple. The U.S. government is investigating TikTok. The Committee on Foreign Investment in the United States (CFIUS) is looking into Chinese technology giant ByteDance's acquisition of Musical.ly, which has since been rebranded as TikTok. An investigation will please SIlicon Valley giants who increasingly see TikTok as a dangerous competitor. Protestors gathered at BlizzCon, a video game convention. Blizzard Entertainment punished a few professional players of the game "Hearthstone" for supporting the Hong Kong protests. More earnings! Apple killed itl Sony's Hollywood business did too. AT&T resolved its fight with a major shareholder. Walmart is looking to sell Vudu, its video website. Vudu sells movies and TV shows, and also rents them. This year, the company started funding original series on a very small scale. Spotify introduced it first app for kids, a "standalone app available exclusively for Premium Family subscribers and intended for kids ages 3+." Hedge fund manager David Einhorn said he made a fortune betting against Netflix's stock in the past year. He also ripped the company for failing to produce a sustainable business model. He didn't mention that he's been shorting the stock since 2016, a period during which Netflix has made investors a lot of money. Also, a few of the week's best reads: Reggie Ugwu on Michael Kiwanuka, Daniel Riley on Ed Norton, Reeves Wiedeman on Conde Nast and Matt Belloni chats with all the Hollywood studio chiefs. Weekly playlist New releases from Dua Lipa, Frank Ocean and Mr. Kiwanuka. I've devoted this space to music, but I also need to call out the new "Slow Burn" podcast about Biggie and Tupac.   You received this message because you are subscribed to the Bloomberg newsletter Hollywood Torrent. You can tell your friends to sign up here.   Unsubscribe | Bloomberg.com | Contact Us Bloomberg L.P. 731 Lexington, New York, NY, 10022