HBO Max, Discovery+ To Merge In Warner Bros Discovery

Warner Bros Discovery (WBD) will be combining streaming services HBO Max and discovery+, and relaunching it as a combined streaming service in the summer of 2023, Jean-Briac Perrette, Chief Executive Officer and President, Global Streaming and Games has said in an earnings call.

"Currently, we’re focused on launching our combined SVOD product with both an ad-light and an ad-free version in many markets. We’ve also begun to explore options of how best to reach consumers in the free ad-supported streaming space. We currently license our library to others, but we’ll assess how best to play in this growing business as the model evolves from free-to-air linear to free-to-view streaming," he states.

Perrette said HBO Max has emerged as the most acclaimed streaming service among consumers and Discovery+ remains one of the top-rated apps and the dominant leader in real-life entertainment. "There are also two very unique and complementary streaming services, distinct in their content appeal ranging from premium scripted series like Succession and the much-anticipated House of the Dragon to leading unscripted programmings such as 90 Day Fiance and Fixer Upper."

He also said that the two services are also different in terms of how subscribers engage with the content. "Some of it being more appointment viewing driving subscriber acquisition, other content being more comfort viewing, driving subscriber retention with people watching hours on end. These are two critical and powerful components of a strong and sustainable subscription business. Couple this with our world-class collection of globally recognized brands, franchises series, and characters it is truly an unprecedented combination."

The company's primary focus will be to roll out the combined service in the markets where HBO Max has already launched. "Given its broader international footprint, we plan to launch the service sequentially starting in the U.S. next summer. Latin America will follow later in the year, European markets with HBO Max will follow in early ‘24, with additional launches in key Asia Pacific territories and some new European markets coming later in 2024. Of course, as we get more of the development work and testing under our belt, we will explore ways to accelerate the rollout, if and where it makes sense."

Perrette said peak EBITDA losses for the D2C segment will occur in 2022 as the company heavy lifting around technology, personnel and integration ahead of the planned re-launch starting next summer. "We are targeting the U.S. streaming business to be profitable in 2024 and for the global streaming segment to generate $1 billion in EBITDA by 2025. Embedded within this target result for 2025 is an EBITDA drag from less mature markets and new market launches. We believe that we can achieve these milestones with a total subscriber base of around 130 million global subs."

HBO Max and Discovery+ have a combined base of 92 million subscribers which is an increase of 1.7 million over the first quarter.