Warner Bros. made big news this past week by announcing that new feature films in 2021 will simultaneously release in theaters and streaming on HBO Max.
For many that haven’t closely followed the company’s corporate transactions, the decision was a bit of a head scratcher. But once you understand that Time Warner was acquired by AT&T in 2018, who had also acquired DirecTV in 2015, it all starts to make sense. Kind of. In a troubling sort of way.
AT&T clearly believes in vertical integration. Vertically integrating has many advantages — you can control the value chain, drive out inefficiencies, and make decisions to maximize profitability.
But it also comes with significant challenges. I’m not sure AT&T is up for those challenges. The companies in AT&T’s portfolio come from industries with very different expectations, market disciplines, cultures, and ecosystems.
In 2020, streaming networks are the shiny thing that everyone is chasing. AT&T wants to turn the crank on the vertically integrated machine they’ve built to deliver growth in HBO Max subscribers. Who cares if Warner Bros. gets squeezed a bit in the process?
It turns out a lot of people care.
Let’s hope AT&T learns their lessons before they do too much damage.