Move Over Netflix? HBO Max Is Gaining Subscribers And Market Share

Shares of streaming-related stocks were hammered this week after an earnings report from Netflix Inc NFLX saw a decline in quarterly subscribers.

One streaming company reported a strong gain in the same quarter and could be taking market share from Netflix.

What Happened: HBO Max and HBO, which are now part of the spun-off Warner Bros. Discovery WBD, reported growth in the first quarter of 2022, according to The Hollywood Reporter.

The two units ended the quarter with 76.8 million global subscribers, including 46.8 million in U.S. global subscribers, which were up by three million in the quarter and incorporated a gain of 1.8 million in the U.S. Over the past 12 months, HBO and HBO Max have added 12.8 million subscribers.

The first quarter for HBO and HBO Max came in stark contrast to Netflix, which reported its subscriber count was down 200,000 in the quarter. Netflix also guided to lose two million subscribers in the second quarter.

The average revenue per user for HBO/HBO Max rose slightly from $11.15 to $11.24 for domestic subscribers and hit $11.72 for global subscribers in the first quarter.

The first quarter follows a fourth quarter that saw strong growth and included the release of “Dune” and “The Matrix Resurrections” on HBO Max.

One area that was highlighted by HBO Max in the fourth quarter was its price points of $15 a month or $10 per month with ads. Netflix raised its prices putting it more in line with the HBO Max monthly costs and is also exploring an ad-supported tier.

Projections for HBO Max came in ahead of company projections to end the fiscal year with WarnerMedia CEO Jason Kilar saying the subscriber numbers were four years ahead of original projections at the time.

Related Link: Netflix Shares Plunge After Q1 Earnings, First Subscriber Loss Since 2011 

Why It’s Important: Kilar said the growth of HBO Max was outpacing the growth of rival Netflix during a CNBC interview after the fourth-quarter report and it looks like this continued in the first quarter.

While the quarter from Netflix offered a warning to the streaming market and the potential saturation of U.S. subscribers, not all platforms will see declines moving forward.

A new report shows streaming platform usage hit 30% of American television viewers in March, the highest among in the 11 months Nielsen has measured viewing habits for streaming and cable platforms.

Netflix ranked first in the Nielsen report making up 6.6% of all television use, followed by YouTube at 6%. Hulu, Amazon Prime Video and Disney+ held steady in the Nielsen report. Other streamers outside the ones mentioned, which would include HBO Max, made up 9.8% of television use, the highest mark from Nielsen’s 11 months of data.

A recent report from The Streamable estimated that HBO Max moved into third place for streaming market share, trailing only Netflix and Amazon.com, Inc. AMZN. The report said that in the U.S., HBO Max had passed Hulu and Disney+, two units part of Walt Disney Co DIS streaming segment.

The first quarter ended on March 31 and did not include what could be the biggest release on HBO Max of the year. “The Batman” was released on HBO Max on April 18 and was a highly anticipated release on the platform.

“The Batman” is the top-grossing movie so far in 2022 with $365.8 million domestically and $752.4 million worldwide. It is possible that some signed up for HBO Max in the second quarter to take advantage of the release of the movie on the platform, which could lead to additional subscriber growth in the next reported quarter.

A Benzinga user poll showed that 17% of consumers were skipping a theatrical showing of “The Batman” and waiting for its arrival on HBO Max.

Before investors rush out to buy shares of Warner Bros. Discovery, it’s important to note that the division, which was spun off from AT&T Inc T, wasn’t all strength like the HBO unit.

Ad revenue for the company fell 3% year-over-year. High launch costs for CNN+ and HBO Max in new international markets led to operating income falling 32.7% year-over-year in the quarter to $1.3 billion.

WBD Price Action: Warner Bros. Discovery shares are down 8.06% to $21.16 on Thursday afternoon. 

Photo: Kaley Cuoco in "The Flight Attendant"; Photograph by Jennifer Rose Clasen/Courtesy HBO Max