Warner/Discovery Merger Means Big Changes for HBO MAX
In April 2022, we reported on the closing of the Warner/Discovery merger. Now that things are beginning to settle, the newly combined company is executing an aggressive strategy to set a direction, which has been outlined in the Warner/Discovery+ (aka WBD) 2022 Q2 report presentation. If you pay for HBO MAX, there are some changes coming.
The Overall Mission
In order to facilitate the merger, WBD has stated the following mission goals.
- Create Quality Content
- Maximize the financial value of the Warner Bros and Discovery content libraries.
- Operate Warner and Discovery as a single company.
Here are the steps that WBD is taking to support its mission.
Theatrical: Immediate renewed emphasis on theatrical film releases. Streaming is important but it isn’t the big money maker that theatrical film releases generate.
Streaming: Combine HBO MAX and Discovery+ into a single streaming service. This is expected to formally occur in 2023 with a target to reach 130 million subscribers by 2025. To get the ball rolling, content from the Magnolia Network will be placed on HBO Max, while some CNN original programming will land on Discovery+. Remember, plans for a separate CNN+ streaming service were scrapped in April 2022.
Provide Streaming Consumer Choice: WBD is planning to offer an Ad-Free paid subscription, lower-priced Ad-lite paid subscription and free Ad-supported options for the combined HBO Max/Discovery+ service.
Tip: The name of the new combined streaming service has yet to be determined, as well as the exact tier pricing information. Also to be determined is how current HBO MAX and Discovery+ subscribers will be migrated into the new service. Those details are expected to be revealed by end of 2022 at a forthcoming Investor Day presentation.
Decisions That Have Been Made
WBD has made the following decisions so far regarding the handling of theatrical and streaming content:
- No more high-profile films released day-and-date in both theaters and streaming or just exclusively on streaming. The “streaming at all cost” strategy that was implemented in 2021 was a bad decision that did not generate needed revenue. This does not preclude short theatrical windows for selected films but ensures that income from theatrical releases is the highest priority.
- Cancellation of poorly-executed film productions: Batgirl, Scoob 2, Wonder Twins as well as canceling/removing some HBO Max original content that doesn’t meet Warner/Discovery’s new quality standards.
- Execute a 10-year plan to revitalize DC by strengthing its core franchises (Batman, Superman, Wonderwoman, Aquaman) and take thoughtful consideration concerning future entries into the franchise properties, which not only include DC but other properties such as Harry Potter, Game of Thrones, etc…
As more details are revealed as Warner/Discovery’s streaming plans for HBO Max and Discovery+ play out, we will try to keep you up-to-date via additions to this article or new articles as appropriate.
As mentioned previously, WBD is expected to reveal more details at its Investor Day Presentation later in 2022.
Of course, you can bet that Netflix, Amazon, Apple, and Disney will be watching WBD’s moves very closely.
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