Aug 4, 2022 - Economy

Merged HBO Max and Discovery+ streaming service to launch next summer

Illustration of the HBO Max and Discovery+ logos merged with a play icon in the middle.

Illustration: Gabriella Turrisi/Axios

Warner Bros. Discovery will launch its planned streaming service that combines HBO Max and Discovery+ next summer, executives said Thursday during the company's earnings call.

Why it matters: The rollup is part of a broader shift in how Warner Bros. Discovery views the streaming space under CEO David Zaslav. Executives believe streaming should complement its other business lines, like theatrical movies and television, not replace them.

  • "Our streaming strategy has evolved over the last year, and reflects the importance of, rather than the dependence on, [streaming]," Zaslav said during the call on Thursday.

Details: WBD will launch the newly combined offering — which may or may not have a different name — first in the U.S. before rolling out to international markets.

  • The rollout will be concentrated initially where HBO Max already has a footprint.
  • WBD expects the combined offering to have around 130 million subscribers globally by 2025 and be profitable by 2024.
  • The new service will be built on Discovery+'s technological platform, not HBO Max's, despite the fact that Discovery+ is much smaller.

By the numbers: The company said that it currently has more than 92 million global subscribers between HBO cable subscribers, HBO Max and Discovery+.

  • The streaming division took a $1.5 billion loss during the quarter.
  • Executives declined to share any pricing information for the combined service, but expressed the importance of making the streaming business profitable
  • 💭Tim's thought bubble: That means it won't be cheap.

Between the lines: WBD is exploring a free, ad-supported streaming service similar to Paramount Global's PlutoTV.

  • Doing so would expand the amount of inventory WBD can use to sell streaming ads. The company told investors Wednesday it booked $6 billion in upfront ad commitments this year, which is $1 billion less than NBCU and $3 billion less than Disney.

The big picture: Investors have been shying away from rewarding media companies for subscriber growth at the cost of being profitable. The clock is ticking for the streaming business to become a viable one.

  • Zaslav defended WBD's recent decision to write down "Batgirl" and other premium movies, saying it didn't make economic sense for expensive films to go direct to streaming.
  • "At the end of the day, putting all the content together was the only way we saw to make this a viable business," JB Perrette, WBD's CEO and president, global streaming and interactive, told analysts.
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