The merger of HBO Max and Discovery Plus aims to reduce subscriber losses with a broad offering that has “something for everyone in the household,” said Jean-Briac Perrette, global head of streaming at Warner Bros. Discovery. The company also came up with the idea of a free streaming service that would be supported by advertisements.
The company plans to launch the merged streaming service in the United States next summer, followed by Latin America later this year. Europe and Asia-Pacific will follow in 2024.
Warner Bros.’ 130 million paid subscriber goal Discovery for 2025 would represent a more than 40% increase from the combined 92 million subscribers it has on HBO Max and Discovery Plus. Netflix said last month it had 220 million paid subscribers worldwide. Disney Plus said in May it had around 138 million subscribers worldwide.
Warner Bros. Discovery will aim to make the new streaming service profitable in the United States in 2024 and have its global streaming segment generate $1 billion in revenue by 2025, Perrette said. No name or pricing system for the new service has been announced.
For the entertainment industry, an HBO Max move is causing peak disruption
Warner Bros. Discovery was formed in April, when AT&T’s WarnerMedia unit and Discovery completed their merger, and started with about $55 billion in debt. As Zaslav’s team looks to compete with Netflix and Disney and move into profitability, it’s also scrapped some legacy projects, like when it pulled the plug on CNN Plus in April, less than a month after the service launched.
During the earnings call on Thursday, Zaslav also reaffirmed that Warner Bros. Discovery would be making “a strategic shift” away from releasing movies directly to streaming, saying the approach makes less long-term financial sense than releasing movies theatrically. “This idea of expensive movies going straight to streaming, we can’t find an economic rationale for it,” he said.
The remarks came after an investor questioned why the company canceled the release of “Batgirl.” The $90 million film — starring Leslie Grace in the title role and starring Michael Keaton as Batman more than 30 years after he first donned the cowl — has been canned alongside ” Wonder Twins” and “Scoob!: Holiday Haunt” because of Warner Bros. Discovery’s new strategy.
The cancellations could also allow for a potential tax deduction, according to a Variety report, and come amid complaints from HBO Max users that certain shows were abruptly removed from the service.
“Our focus will be the theatre,” Zaslav said. “And when we bring the theatrical movies to HBO Max, we find they’re much more valuable.”