HBO Max and Discovery+ Merge Streaming Service for Summer 2023 Launch

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

Why it matters: The update is part of a wider shift in how Warner Bros. Discovery takes a look at the streaming space under CEO David Zaslav. Executives believe that streaming should complement, not replace, other business areas such as cinema and television.

  • “Our streaming strategy has evolved over the past year, reflecting the importance of, rather than reliance on, [streaming]’ Zaslav said during the conversation on Thursday.

Details: WBD will launch the new combined offering – which may or may not be renamed – in the US first before rolling it out in international markets.

  • The rollout will initially be concentrated where HBO Max already has a footprint.
  • WBD expects the combined offering to reach approximately 130 million subscribers worldwide by 2025 and be profitable by 2024.
  • The new service will be built on Discovery+’s technology platform, not HBO Max’s, despite Discovery+ being much smaller.

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

  • The streaming division suffered a loss of $1.5 billion during the quarter.
  • Executives declined to share 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 investigating a free, ad-supported streaming service similar to Paramount Global’s PlutoTV.

  • This would increase the amount of inventory WBD can use to sell streaming ads. The company told investors on Wednesday that it has booked $6 billion in ad pledges this year, which is $1 billion less than NBCU and $3 billion less than Disney.

The big picture: Investors are reluctant to reward media companies for subscriber growth at the expense of profitability. The clock is ticking for the streaming business to become a viable one.

  • Zaslav defended WBD’s recent decision to list “Batgirl” and other premium movies, saying it didn’t make economic sense to send expensive movies straight to streaming.
  • “Ultimately, the only way to make this a viable business was to bring all the content together,” JB Perrette, WBD’s CEO and president, global streaming and interactive, told analysts.

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