SVOD Launch Costs Lower HBO Operating Profit

With WarnerMedia readying the May debut of HBO Max, launch-related costs around the high-profile over-the-top video platform contributed to a 23% drop in fourth-quarter (ended Dec. 31, 2019) operating income for HBO.

Operating expenses increased more than 16% in the quarter to $1.2 billion, from $1 billion in the year-ago period. For the year, costs skyrocketed nearly 97% to $4.4 billion, from $2.3 billion.

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The premium channel saw Q4 operational profit of $481 million, compared with operating income of $622 million in the previous-year period. For the fiscal year, operating income increased 72% to $2.3 billion from $1.3 billion in 2018.

HBO consists of premium pay-TV and OTT services domestically and premium pay, basic tier television and OTT services internationally, as well as content licensing and home entertainment.

HBO’s Game of Thrones: The Complete Eighth Season topped the NPD VideoScan First Alert chart, which tracks combined DVD and Blu-ray Disc Unit sales, and the dedicated Blu-ray Disc sales chart the week ended Dec. 7, 2019. The boxed set was released Dec. 3.

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Blu-ray Disc versions of the final “Game of Thrones” season accounted for 53% of the title’s total unit sales in its first week, while the 4K Ultra HD Blu-ray accounted for 10% of its total.