Streaming services see change with Discovery + HBO Max merger
During the company’s second quarter 2022 earnings call, David Zaslav, chairman and CEO of the new Warner Bros. Discovery Inc., has announced plans to merge streaming services HBO Max and Discovery+ into a single entity. The merger would take effect in the summer of 2023, with Discovery+ absorbing HBO Max and distributing content on a yet-to-be-named platform called “Warner Bros. Discovery.”
The combined service is said to have the largest TV library of any major platform with just under 3,000 TV shows, beating Netflix’s ~1,800 for the top spot. According to data from Reelgood and IMDb, as of April 11, HBO Max offered 2,586 movies and Discovery+ offered 417, putting a combined catalog of 3,003 movies in third place behind Prime Video (6,985) and Netflix (4,091). Discovery CFO Gunnar Wiedenfeld called the collaboration “a phenomenal value proposition for the consumer,” making the service a formidable player in the streaming service industry.
Although future pricing for the new service has yet to be announced, it will likely remain within the current range of streaming plans. Apple TV+ currently has the lowest subscription cost, set at $4.99 per month, while Netflix’s three plans cost $9.99, $15.49, and $19.99. HBO Max currently offers two plans, $9.99/month for ad-free streaming and $14.99 for an ad-free experience, while Discovery+ offers ad-free and ad-free plans for $4.99 and $6.99 respectively. . Adding HBO Max content would add to the value of a monthly subscription, however, it’s a safe bet that prices will be higher than current plans for Discovery+. Bundling the new service with other platforms for a cheaper total price than the separate add-ons would help the new service stay competitive, especially against the Disney+, Hulu and ESPN+ package, the Live TV+ package at Hulu’s demand and the new Showtime/Paramount+ package.
Warner Bros.’ second-quarter earnings call Discovery follows Netflix’s recent loss of subscribers, which had a ripple effect across the streaming services industry. In April, Netflix announced its first net subscriber loss in a decade, which it attributed to a more competitive market. Despite a predicted loss of 2 million subscribers, the company only lost 970,000 – seen as a win in the eyes of investors and lending to a hopeful prediction of a one million subscriber gain in the third quarter of 2022.
With an increasing number of streaming services crowding the market, it only makes sense for companies to tighten their budgets and do whatever they can to stay competitive. One such casualty of this shift in the industry was the short-lived CNN+ streaming service, which only lasted a month. After its March 29 launch, CNN+ drew around 150,000 subscribers in its first few weeks. Keeping in mind the relatively low projected 2 million subscribers by the end of the year, 150,000 in two weeks still equates to meager engagement numbers, especially compared to Disney+, which had more than 10 million subscribers on launch day.
However, it wasn’t just the numbers that contributed to CNN+’s downfall. CNN’s parent company, WarnerMedia, had just merged with Discovery in early April, and David Zaslav, the CEO of the newly formed company, planned to consolidate all of the company’s brands onto a single streaming service. This meant WarnerMedia’s separate platforms would either have to merge or collapse, with the former exemplified by HBO Max and Discovery+, and CNN+ succumbing to the latter.
Founded in 1972, HBO was the pioneering example of a premium channel, providing additional television service for an additional monthly fee. Without the traditional advertising and sponsors, HBO could produce grittier, more salacious content than basic cable allowed.
Although many platforms now release similar content to keep up with cultural trends, HBO was the parent of many of the early iterations of darker and more dramatic television and has several classics in its catalog. “The Sopranos” (1999-2007) influenced future shows by popularizing the anti-hero, dark storylines, and higher budgets for serialized storylines. One of the most successful fantasy series of all time, ‘Game of Thrones’ broke HBO streaming records with 17.4 million viewers tuning in for the 8th (and final) season premiere . The record broken? None other than the 16.9 million viewers who tuned in to the show’s 7th season finale.
Other shows that have contributed to HBO’s success include ‘Sex in the City’, ‘The Wire’, ‘Westworld’ and ‘Euphoria’, with the latter becoming the second most-watched show in HBO history, just behind “Game of Thrones”. “Because of HBO’s penchant for giving its talent the necessary resources and space, as well as its willingness to take some risks, the brand has remained a powerhouse of quality television even as the industry landscape changes.
Since its inception in 1985, Discovery, Inc. has focused primarily on informational and lifestyle television programming. The Discovery Channel, home to the “Shark Week” sensation, also features investigative, educational and reality shows like “MythBusters,” “Dirty Jobs” and “Deadliest Catch.” At one time, Discovery Networks US owned and operated many popular channels including Food Network, Animal Planet, Travel and Science Channels, Oprah Winfrey Network and TLC. When David Zaslav was named president and CEO of Discovery Communications in 2006, he expanded the brand into digital media and programming, eventually leading to the launch of Discovery+ in January 2021.
Despite strong content offerings, Discovery+ ended 2021 with around 22 million paid streaming subscribers, a generous but paltry audience compared to Netflix’s 221.8 million and HBO and HBO Max’s 73.8 million. Aiming to reduce subscriber losses and provide a larger catalog of content, the merger of Discovery and WarnerMedia clearly benefits the former’s numbers, as the combined number of subscribers would be over 92 million.
Although the new streaming service won’t be available until 2023, the content is already changing hands. Some programs from both streaming services will appear on other platforms even if some content is removed. Shows like “Fixer Upper” will arrive (from Discovery’s Magnolia Network) on HBO Max on September 30, while some HBO original movies have already been removed from the service. It hasn’t been announced which HBO programs will be added to Discovery+ in the meantime, but CNN will get its own spot on Discovery+, which will host CNN Originals slated for CNN+ (“Stanley Tucci: Searching for Italy,” “Anthony Bourdain: Parts Unknown”).
It’s unclear exactly which direction Zaslav is taking Warner Bros. Discovery, especially after the nearly completed $90 million “Batgirl” movie was scrapped. It was also reported that 70% of HBO Max’s production staff could be cut, “with the goal that they just don’t want more scripted content reserved for HBO Max”, an interesting choice given that the added value from HBO is more cinematic, and the scripted content seems to be the biggest selling point of the Discovery + HBO Max merger. For now, audiences will just have to choose which streaming services to stay subscribed to, keeping the market competitive until the new streaming service is revealed.