Is the whole of a combined HBO Max-Discovery+ greater than its streaming parts? Warner Bros. Discovery is going to find out next year.
The media company announced a timeline for the two services to be fused together: HBO Max and Discovery+ will launch in the U.S. as a single service in the summer of 2023, according to JB Perrette, CEO and president of global streaming and interactive for Warner Bros. Discovery, speaking on the company’s Q2 earnings call.
“At the end of the day, putting all the content together was the only way we saw to make this a viable business,” Perrette told analysts. Bringing HBO Max and Discovery+ together is aimed at cutting churn so “there’s something for everyone in the household,” he said.
WBD did not announce what the new brand name for the merged service will be, nor did execs discuss pricing for the unified streamer. Warner Bros. Discovery is initially focused on the ad-supported and ad-free versions of the combined HBO Max-Discovery+, Perrette said, but is also “exploring how to reach customers in the free, ad-supported space” with content that is totally different from what’s on the premium VOD services.
HBO may or may not be part of the name of the unified direct-to-consumer WBD platform; Perrette said he company is doing research on consumer perception of the HBO Max name. But, HBO will continue to be a major brand: “HBO will always be the beacon and the ultimate brand that stands for television quality,” he said on the call.
The merged HBO Max-Discovery+ will combine the best elements of both services, said Perrette. He said HBO Max has had “performance and customer” issues but offers a rich set of features; Discovery+ has more limited features but provides a more robust underlying delivery capability.
After the summer 2023 rollout in the United States, WBD plans to take the unified HBO Max-Discovery+ platform to Latin America in the fall of 2023; Europe in early 2024; Asia Pacific in mid-2024; and additional markets in fall 2024.
In the second quarter, WBD’s HBO Max, HBO and Discovery+ subscribers combined were 92.1 million, up 1.7 million from 90.4 million the prior quarter. That’s up 22% 75.8 million on a pro-forma basis versus a year earlier.
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By 2025, WBD expects to have 130 million global streaming subscribers and that its direct-to-consumer businesses will generate $1 billion in earnings before interest, taxes, depreciation and amortization (EBITDA). Perrette said the company expects EBITDA losses for the streaming division to peak in 2022, with long-term margin potential of 20% or more.
Currently, HBO Max is available for $14.99/month without ads and $9.99/month with ads in the U.S. Discovery+ is priced at $6.99/month without ads and $4.99/month with ads.
The company previously announced intentions to combine the two flagship streaming platforms — HBO Max from the legacy WarnerMedia (spun off from AT&T) and Discovery’s Discovery+. Ahead of the close of the deal forming Warner Bros. Discovery, CFO Gunnar Wiedenfels in March broadly sketched out a strategy to combine the streamers, saying that initially it would sell the pair as a bundle before fully integrating them.
The merged HBO Max-Discovery+ will smash together thousands of hours of programming, a disparate slate spanning scripted, reality and documentary content — and will look a bit like a mini cable TV bundle. WBD took a step Thursday toward unifying HBO Max and Discovery+ on the content side, announcing that Chip and Joanna Gaines’ Magnolia Network programming will be coming to HBO Max this September (while remaining on Discovery+).