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Apple Looks To Fix Past Mistakes, While AT&T's HBO Max Seems Destined To Repeat Them

Jun. 03, 2020 8:28 AM ETApple Inc. (AAPL), TDIS73 Comments


  • AT&T’s new HBO Max streaming service launched last week, joining the long list of big-name companies entering the space.
  • Investors may see some similarities to when Apple entered the streaming landscape last year in terms of questions about short- and long-term viability.
  • The prevailing theory is when it came to launch strategies, Apple took an overly simple approach, while AT&T’s was needlessly complicated.
  • The concern with HBO Max is aside from a COVID-19-related reduced roster of originals, not all HBO subscribers will get free access and it is not available on all platforms.
  • Conversely, investors will finally see Apple take steps towards fixing its streaming flaws by beefing up its bare-bones service with a significant investment in catalog content and original films.

(Image Credit: AT&T)

It really seems easy.

At least in theory, launching a streaming service sounds simple, or it did when there was only a few of them. All you really need is content, but as we’ve seen, that is not as simple to acquire (or create) as one would expect. And then, when you break it down further, you have to have a system in place to showcase that content and then a distribution system to share that content.

The point in all this is that while “content” may be king, you can make a strong argument that process is queen, and if the queen’s not happy, the king’s in trouble If you invest in Apple (NASDAQ:NASDAQ:AAPL) or AT&T (NYSE:NYSE:T), you’ve probably learned that by now - the hard way.

As AT&T’s HBO Max approaches the one-week mark, it’s become clear that like Apple+ the service will have a learning curve, but unlike Apple, which looks to have learned a new trick or two, for the moment HBO Max can’t seem to get out of its own way.

First, as always, some background.

From an investor standpoint, it has probably been nerve-wracking watching Apple and AT&T build streaming services. After all, Disney (NYSE:DIS) made it look so easy, so why couldn’t two equally innovative companies get it right from go?

Shareholders may remember Apple’s problem in all this was it tried to keep it simple - but made it really simple. Like “this can’t be all, right?” simple. The thing many people forget about Apple+ is that its secondary objective is to be a streaming service - its first to sell more Apple products to consumers.

Once you remember that, you’ll understand why its launch was so mind-numbingly straightforward. From the first awkward press conference with one celebrity after

This article was written by

A long time entertainment industry professional, I have worked with a number of top Hollywood studios and networks. With over a decade in the field I use my in-depth knowledge of film and television to inform potential investors about the viability of the many upcoming projects in the industry. Questions? E-mail me at TheEntertainmentOracle[at]gmail.com.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (73)

TreDrier profile picture
Who in their right mind would launch a new highly anticipated streaming service upgrade (in reality that's all HBO MAX is) without supporting streaming services? Roku and Amazon should have been worked out way prior to the launch. What a complete let down.
Well it may have been an imperfect rollout but at least they're not censoring any treasured, highly popular, classic films that portray periods of American conflict, because of shifting modern sensibilities that are in fashion. That kind of cheap pandering would be really bad.
LONGBULL+ profile picture
Apple will make a brilliant move post pandemic.
They will buy Discovery.
To become the Netflix of unscripted TV.
Discovery is about to buy 50% of Lionsgate this year or in 2021.
This will put Apple right back on the same level as Netflix.
Unscripted TV costs around one tenth of the cost compared to scripted.
Discovery owns all of their IP.
Produces 3.1 billion free cash flow.
Buying Discovery will cost them between 30 or 40 billion.
Apple can pay that.
Amazon has cash reserves of around 55 billion, they will not spend that one company. Netflix,Disney or T cannot afford that financially.

Apple buying Discovery (incl 50% of Lionsgate/Starz) will put them right back on the same place as Netflix....
r Negoro profile picture
This is my 2 cts, tim cook would be fired if. Jobs was alive.
Innovation is low and eventually they will die out with the wrong move. Phones should be cheaper not more expensive, basically they have to make phones that are cheap and rely on software to get revenue, under $300. Se was the right move but it's too small screen.

. That's the future of aapl.
SeaSilver profile picture
Good Article. I agree with the T made it too complex. HBO Now and HBO Go were complex enough and then instead of merging everything into HBO Max, they just added another piece. To me it seems like T thought they were the 1,000lb gorilla and Roku & Amazon & all cable companies would buckle and give them whatever they demanded, then they could merge all the options. If this was their grand plan, it failed. Instead of minimizing the failure impact, they stuck to the plan even after go-live. That coupled with minimal pre go-live advertising to increase immediate interest are my thoughts why this went so wrong. Great product, ok price, horrible execution.
nerd_rage profile picture
Yeah their strategy was to stomp around yelling HBO! HBO! So that everyone will bow down to them. Roku and Amazon sneered and shrugged instead.

T doesn't understand how fragile even the best brand is. Hard to build, very easy to break. As they will find out, having smashed that expensive Fabergé egg that they spent billions to buy. Egg fragments aren't worth billions. They aren't worth anything. I'll avoid the obvious egg on face metaphor now...
r Negoro profile picture
Niche market.
Disney doesn’t have much to watch
Basit Saliu profile picture
BREAKING NEWS:www.cordcuttersnews.com/...

Go T, upward to $60.00!
optomos profile picture
That's great new!
Basit Saliu profile picture
That for sure.
nerd_rage profile picture
It's always enlightenting to read the comments section such as: I bet it isn't #1 for Roku downloads.
omdguy profile picture
Nice article, so thank you for taking the time.

I found it interesting that you dinged HBO for no Amazon and no Roku support while Apple TV forces you to use only their hardware. To me, that is a MASSIVE mistake. I am going to go out on a limb and state that there are WAY more Windows and Android devices in the world that Mac/iOS. That, plus their limited, and IMO, boring offerings I think are insurmountable.

As an investment, I wouldn't put money into Netflix, but as a consumer, they have some of the best material out there! Sure, there are some clunkers, but things like Black Mirror, The Blacklist are amazing.

I have confidence T will sort out the confusion as it's not uncommon to stumble out the gate (Netflix didn't have a lot of content when they got into the biz). I don't think Hulu is going to survive, and I have my doubts about Amazon as well (I am a prime member but can't find anything I want to watch in their catalog...)

The biggest blunder in this seems to be Apple's strategy. I posted in here that I cannot see how movies, games and music are going to drive any hardware sales, especially TV+. Who would put down hundreds of dollars on a device that they could get for a fraction of a cost for a Windows or Android device, just to watch a catalog of like 20 options? I also can't see TV+ helping to keep customers 'sticky' to the platform. I would guess that most people that own Apple devices are using other services for movies and music, and when their free trial is up, the number of people who will WILLINGLY sign up again will be very low. Some folks will forget about it and just pay the $5 a month, but the number of people actually using TV+ will be very low.

That's just my opinion, but I could be wrong (yes, I am ripping off Dennis Miller here) :-)
The Entertainment Oracle profile picture
Thank you for the kind words and appreciate your comment. You have a very valid point, the reason why I dinged HBO/T for it and not Apple is largely because of the nature of the company.

HBO has always been widely available and Max is an upgrade of sorts - so for the people who have had it prior to not be able to access it as easily as other streamers (and potentially not even get it free as a current subscriber) just seems like a misstep and in some ways insulting to loyal subscribers.

With Apple, they have always played by their own rules so it really wasn't shocking to see them initially put some restrictions on the access that benefits them - plus it was a wholly new service and wouldn't negatively impact past customers accustomed to specific content. I think now you can access it through Roku though.
11 Jun. 2020
Apple TV+ is available on my Samsung smart tv.
The biggest issues T over pays, over promises and always under performs.
Waiting to see how bad Q2 will be probably a lot worse than they though.
Basit Saliu profile picture
T is still the telecom and media conglomerate with most OCF and FCF. Even DIS and CMCSA dont come near that.
Both companies should stick to their main business. Netflix is enough for most people . And Pluto TV is excellent and free. Att has not fixed their glitchy ATT TV, and Apple forgot about innovating in their main business. Both companies are trying to do what Amazon and Google have already done, and they are failing so far. Most people will not have 9 subscription services.
nerd_rage profile picture
Here's an enlightening article on exactly where T is going wrong:


"But the integration of Time Warner — now WarnerMedia — into AT&T is the company’s core bet: AT&T’s strategy is to make its own wireless service more appealing by offering discounted movies and TV shows (think bundled HBO), while also collecting data from people using those services to study what people are watching. It’s meant to create a symbiotic cycle, with the two businesses continually bolstering one another."

"We need to make this move to compete with companies that are incredibly strong and capable like the Googles, Amazons, and Apples of the world — and so we’re playing big,” Stankey told Bloomberg in 2019."

"There’s a chance that HBO Max fails. The market is filled with streaming services, and every corporation under the sun seems to want to launch one. Amazon, Netflix, and Disney have already found large audiences, and it’s possible the streaming space is only going to produce a few big winners, argues Kester Mann, an analyst and director at London’s CCS Insight firm. AT&T could already be too late."

Yup. there's a very strong chance that HBO Max will fail. Instead of trying to compete with Netflix, Stankey is trying to compete with Google and Amazon. But does AT&T do search? Does AT&T sell groceries and deliver them to your home? If he'd tried to compete with Netflix and Disney, he might have made something of HBO Max.
03 Jun. 2020
If you had HBO Now, you get full access to HBO Max through Now. HBO Now has been out for years and they've been doing just fine with that. HBO Max is a nice refresh of the service and a stronger effort to gain more customers.

HBO Now/Max will be fine, as they have been the past few years. Generating a little extra cash flow and getting a small and slowly growing market share in the streaming wars is a nice long term move.
nerd_rage profile picture
So there was no point to T launching HBO Max because it's exactly the same as HBO Now? So what was the point of any of this?

Long term, the winners in the streaming wars are being decided now. So now is not the time to being doing a faceplant. AAPL blew it, CMCSA has no hope, T had a great shot at locking in a solid place on the winner's podium but now they've opened themselves up to being shoved aside by tiny little VIAC, which is busy right now getting its streaming act together and will announce something during the summer.

Dumb dumb dumb! How could T put themselves in this stupid position? I'm rooting for VIAC. Don't sell to anyone Shari! Show the idiots how it's done.
03 Jun. 2020
If I'm understanding this correctly, HBO Now will be replaced by Max. Apple is going to take their time with their streaming service, they aren't going to be hurt by it much, if at all.
rosestanvt profile picture
Well, what can one expect about "kiss"from ATT. They always made buying into their platforms unnecessarily complex, didn't they? And don't forget the small print!
craftbrewinfo profile picture
I own T and AAPL. Glad T is in streaming.. just another revenue stream for T. HBO though just doesn't have that cutting edge feel it used to have in the 90's and 2000's. My wife and I exclusively watched Netflix during the big shut in and there was ALWAYS something interesting on (i.e. tons of content) . T took alot of flack with their less than exciting roll out ( big woop) . They are in the game, leveraging the Time Warner acquisition, so that is a positive. I don't think of AAPL as a streaming company per se, they are in the game too, but their real growth is services and wearables. That's what I invest in them for!
richjoy403 profile picture
Here are a few items $t longs may find of interest:

1) HBO Max was launched on May 27th, and the following day we learned the day-1 new subscriber stats (90k) were awful and T shares, which had traded as high as $32.07 before that announcement, closed down 80-cents on the day at $31.06.

3 market days later, T's (intraday) share price has recovered to $31.53. Could it be Mr. Market hasn't yet given up on AT&T and/or its HBO Max?

2) Longs will be interested in the following article describing "Why HBO Max Isn't on Roku or Fire TV Yet".
I suspect AT&T must 'pay-up' (i.e. share ad revenue) to be on the Roku and Amazon platforms.

3) Here's a 'must read' article suggesting AT&T may provide a significant advantage to Max subscribers (the topic was mentioned, but dismissed, in the DoJ anti-trust case).

Max is very slow out of the gate, which I suspect represents a textbook case study 'marketing failure'. Nonetheless, the race is long, and it's too soon to decide Max's failure or success in attracting subscribers.

No new streaming service will challenge Netflix for a very long time. AT&T shareholders will need at least 3 or 4 months to get a handle on Max's competitive position (#2, #3, #4?). More important, we won't know Max's impact on T's earnings before the 3rd quarter earnings report (about Oct. 22nd).

I'm neither adding nor subtracting T shares.

nerd_rage profile picture
I think new HBO Max subscribers were better than 90K. Those are just mobile downloads. But whatever the true numbers are, they must be pretty bad because T isn't telling us. 90K would be some kind of absurd joke. Gotta be at least a million, right? They should be able to do a million in their sleep.
The Entertainment Oracle profile picture
Was going to point out the same thing - those were just click-bait stories about low subs. Reporter's were not counting those upgrading from any of the various HBO's and had to put in a clarification at top of piece after.
richjoy403 profile picture
As for Apple TV...
It was launched light on content, but also inexpensive, and benefited from much positive publicity buzz.

Most important, Apple (and Disney) are quite different and much faster growing companies compared to AT&T.

Readers will recall Apple and Disney announced last year they are prepared for Apple TV and Disney+ to lose $5 billion/yr for up to 5-years, as they invest in original content and build their streaming services.

Apple and Disney have much deeper pockets compared to AT&T, and don't carry AT&T's heavy debt load. (AT&T's Interest Coverage Ratio is 3.3; Apple's is 21.9; and Disney's is 5.3).
kos47 profile picture
Never cared much about HBO and now this HBO MAX. This is the way my thinking goes about AT&T, as long as the stock doesn't nosedive to $20.00 per share and they don’t stop paying me a nice dividend I’m fine with it, as for the rest, it’s all noise to me.
nerd_rage profile picture
AAPL and T are both getting into an area they don't understand and are making different mistakes.

AAPL doesn't understand that to compete with NFLX, they need a huge and broad-based library that does not necessarily synch with the Apple Brand, since it needs to include both lowbrow crap and highbrow premium content. And even for the premium content AAPL tries to make, it lacks compelling entertainment value. They just have a lot to learn in making content, but NFLX flubbed at first until they hit on House of Cards.

If AAPL is trying to use streaming as a perk to increase hardware sales, then they aren't necessarily playing the broad-based NFLX game. But they still need to learn how to make entertaining content that anyone will bother to watch. If that's the goal, they should turn it all over to Richard Plepler and let him create HBO 2.0 for them.

Speaking of HBO 1.0, T seems to be so mired in arrogance and myopia, I don't think they'll solve their myriad problems. They purchased huge brands at a huge price, so the obvious thing to do is, simply mimic DIS.

Start making content that fits each of the sub-brands such as HBO and DC and yes HBO is a sub-brand, not a master brand. It means something specific and not all-inclusive. Calling their service HBO Max makes about as much sense as calling it DC Max. Hey it's superheroes and so much more! Why are people confused? They must be stupid.
Basit Saliu profile picture
Unlike AAPL, T have many brands and content.
omdguy profile picture

You hit the nail on the head!!! I can't imagine anyone crazy enough to buy an expensive piece of hardware just to watch a streaming service that has like 20 options! I honestly don't know why Apple got into this business to begin with. Apple's biggest 'service' in their arsenal is Apple Care (I have friends that work at Apple as I am also in tech), so I can't see music, movies and games moving the needle for them at all!
Alpwolf profile picture
Apple knows that with $5.99 and $6.99 streaming service it would take massive
Losses! Why so many wish loading up on money loosing service is the way to go?
Netflix is spending billions that they don’t have and have to go to lenders .
Cash flow is not the same as free cash flow! One has it and the other does not!
Some streaming deals have not been negotiated because one Wants the money !
and one has it ,the other needs to borrow...
Not to worry a deal will come together because AT&T is not desperate and will agree
To a deal when it makes sense
edmond-dantes profile picture
Adding to AT&T longterm problems is the fact they are gutting network assets and their creatives. I fear "management" will ruin HBO and you will see an exodus of existing talent. HBO's already lost the "prestige" battle, point Netflix. You now have Apple and Disney giving Les Grossman (Tropic Thunder) welcoming talent to the "Goodie Room"
NV_GARY profile picture
Apple fix? How about correcting the overheating problems with every MacBook update for years? Probably the biggest part of their forum. They just don't give a damn.
No, mine is fine.
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