Mumbai: On a second-quarter earnings call on Thursday, Warner Bros. Discovery announced the merger of HBO Max and Discovery+. The media conglomerate set a timeline for integrating the two services.
According to Warner Bros. Discovery CEO and president of global streaming and interactive JB Perrette, who spoke on the company's Q2 earnings call, HBO Max and Discovery+ will launch in the United States as a single service in the summer of 2023. "At the end of the day, putting all the content together was the only way we saw to make this a viable business," he said.
Bringing HBO Max and Discovery+ together is aimed at cutting churn, so "there’s something for everyone in the household," he added. WBD did not reveal the new brand name for the combined service, nor did executives discuss pricing for the unified stream.
According to Perrette, Warner Bros. Discovery is initially focused on the ad-supported and ad-free versions of the combined HBO Max-Discovery+ but is also "exploring how to reach customers in the free, ad-supported space" with content that is distinct from what is available on premium VOD services.
He added that HBO may or may not be included in the name of the unified direct-to-consumer WBD platform; Perrette stated that the company is conducting consumer research on the HBO Max name. "HBO will always be the beacon and the ultimate brand that stands for television quality."
The combined HBO Max-Discovery+ service, according to Perrette, will combine the best features of both services. According to him, HBO Max has performance and customer issues but offers a rich set of features, whereas Discovery+ has fewer features but a more robust underlying delivery capability.
Following the launch of the unified HBO Max-Discovery+ platform in the United States in summer 2023, WBD plans to bring the platform to Latin America in the fall of 2023, Europe in early 2024, Asia-Pacific in mid-2024, and other markets in the fall of 2024.
WBD's HBO Max, HBO, and Discovery+ subscribers reached 92.1 million in the second quarter, up 1.7 million from the previous quarter's 90.4 million. On a pro-forma basis, this is a 22 per cent increase of $75.8 million over the previous year.
WBD expects to have 130 million global streaming subscribers by 2025 and to generate one billion dollars in earnings before interest, taxes, depreciation, and amortisation from its direct-to-consumer businesses (Ebitda). He shared that the company's Ebidta losses in the streaming division are expected to peak in 2022, with a long-term margin potential of 20 per cent or higher.
Currently, HBO Max costs $14.99 per month without ads and $9.99 per month with ads in the United States. Discovery+ costs $6.99 per month without ads and $4.99 per month with ads.
The company, on 17 May 2021, announced its plans to merge its two flagship streaming platforms, HBO Max from the legacy WarnerMedia (spun off from AT&T) and Discovery+. CFO Gunnar Wiedenfels broadly sketched out a strategy to combine the streamers in March 2022, ahead of the close of the deal forming Warner Bros. Discovery, saying that it would initially sell the pair as a bundle before fully integrating them.
The merged HBO Max-Discovery+ streaming platform will combine thousands of hours of programming spanning scripted, reality, and documentary content and will resemble a mini-cable TV bundle.
