Is the whole of a combined HBO Max-Discovery+ greater than its streaming parts? Next year, Warner Bros. Discovery will find out.
The media company set a date for when the two services will be merged: JB Perrette, CEO and president of global streaming and games for Warner Bros. Discovery, said on the company’s Q2 earnings call that HBO Max and Discovery+ will launch in the U.S. as a single service in the summer of 2023.
Perrette told analysts, “At the end of the day, putting all the content together was the only way we could see to make this a profitable business.” The goal of combining HBO Max and Discovery+ is to reduce customer turnover so that “everyone in the house can find something to watch,” he said.
WBD did not say what the new name of the combined service will be, nor did executives talk about how much it will cost. Warner Bros. Discovery is focusing on the ad-supported and ad-free versions of the combined HBO Max-Discovery+ for now, Perrette said, but it is also “exploring how to reach customers in the free, ad-supported space” with content that is very 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 that his company is researching how consumers feel about the name “HBO Max.” But HBO will still be a major brand. “HBO will always be the beacon and the ultimate brand that stands for quality television,” he said on the call.
Perrette said that when HBO Max and Discovery+ are combined, the best parts of both services will be brought together. He said that HBO Max has had “performance and customer issues,” but that it has a lot of features. He said that Discovery+ has fewer features but a stronger delivery system.
WBD plans to roll out the unified HBO Max-Discovery+ platform in Latin America in the fall of 2023, Europe in the early part of 2024, Asia-Pacific in the middle of 2024, and other markets in the fall of 2024. This will follow the summer 2023 launch in the United States.
In the second quarter, WBD had 92.1 million subscribers to HBO Max, HBO, and Discovery+. This is up from 90.4 million in the first quarter. Compared to a year ago, this is an increase of 22 percent, or $75.8 million.
WBD expects to have 130 million streaming customers around the world by 2025, and its direct-to-consumer businesses will bring in $1 billion before interest, taxes, depreciation, and amortization (EBITDA). Perrette said that the company expects the streaming division’s EBITDA losses to reach their peak in 2022, with a long-term margin of at least 20% possible.
In the United States, HBO Max costs $14.99/month without ads and $9.99/month with ads. Discovery+ costs $6.99 per month if there are no ads, and $4.99 per month if there are ads.
The company had already said that it wanted to combine its two most popular streaming services, HBO Max from WarnerMedia (which was spun off from AT&T) and Discovery’s Discovery+. Before the closing of the deal that made Warner Bros. Discovery, the CFO Gunnar Wiedenfels gave a broad outline of a plan to combine the two streaming services. He said that at first, they would sell the two together as a package before integrating them fully.
The new HBO Max-Discovery+ will have thousands of hours of different shows, including fiction, reality, and documentaries. It will be a bit like a mini cable TV bundle. WBD took a step toward combining the content of HBO Max and Discovery+ on Thursday by announcing that Chip and Joanna Gaines’ Magnolia Network shows will start airing on HBO Max in September. These shows will still be available on Discovery+.
