HBO's 800,000 Web-Only Users Fall Short of Analyst's Estimate

  • First disclosure of subscriber count for HBO Now by network
  • Netflix had 43.4 million U.S. subscribers at end of 2015

Time Warner Inc.’s streaming service, HBO Now, has signed up 800,000 subscribers, falling short of at least one estimate of 1.4 million.

HBO, which hadn’t previously disclosed the number of Now subscribers, has been expanding the $15-a-month Web service to compete against Netflix, Hulu and Amazon. Barton Crockett, an analyst at FBR Capital Markets & Co, had estimated that HBO Now had gained 1.4 million subscribers.

HBO Chief Executive Officer Richard Plepler, on a conference call, said HBO Now was still not available on some devices like Sony PlayStation and Microsoft XBox and that new programming from Jon Stewart and others hadn’t yet been introduced to the service. HBO plans to more aggressively market the streaming service in 2016, he said.

Among streaming services, Netflix had 43.4 million paid U.S. subscribers at the end of 2015, and Dish Network Corp.’s Web service Sling TV, which offers about 20 channels for $20 a month, had about 394,000 subscribers by the end of the third quarter of 2015, according to Craig Moffett, an analyst at MoffettNathanson. 

HBO Now, which circumvents the traditional cable and satellite distribution model, may generate annual revenue of $900 million to $1 billion with 5 million subscribers, according to Bloomberg Intelligence analysts Geetha Ranganathan and Paul Sweeney.

“While HBO Now’s success may undermine $5 billion of steady affiliate fees, Time Warner said that cannibalization has been minimal, with less than 1 percent of subscribers leaving for Now,” Ranganathan and Sweeney wrote in a note Jan. 12.

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