Discovery, which will merge with AT&T‘s WarnerMedia next month to become Warner Bros. Discovery, has stated that it will combine its current streaming service Discovery Plus and WarnerMedia’s HBO Max into one platform rather than offering the two platforms as a combo.
Discovery CFO Gunnar Wiedenfels, who will also serve as CFO of the newly combined Warner Bros. Discovery, said Monday at the Deutsche Bank 30th Annual Media, Internet & Telecom Conference that the company is preparing to merge the two streamers. This is the first time the company has revealed its post-merger strategy for Discovery Plus and HBO Max, amid speculation they could remain standalone platforms with bundling options.
But, according to Wiedenfels, the initial stage in the integration process will be some type of bundling until the new business figures out how to mix the two platforms.
“One of the most important items here is that we believe in a combined product as opposed to a bundle… We believe that the breadth and depth of this content offering is going to be a phenomenal consumer value proposition,” Wiedenfels said. “The question is, in order to get to that point and do it in a way that’s actually a great user experience for our subscribers, that’s going to take some time. Again, that’s nothing that’s going to happen in weeks — hopefully not in years, but in several months — and we will start working on an interim solution in the meantime. So right out of the gate, we’re working on getting the bundling approach ready, maybe a single sign-on, maybe ingesting content into the other product, etc., so that we can start to get some benefits early on. But the main thrust is going to be harmonizing the technology platform. Building one very, very strong combined direct-to-consumer product and platform, that’s going to take a while.”
Discovery Plus is currently available for $4.99 per month with advertisements or $6.99 per month without ads, and it accounts for the majority of Discovery’s streaming subtotal, which the company stated had 22 million global consumers at the end of 2021. Last year, HBO Max and HBO had a combined global subscriber base of 73.8 million.
HBO Max is available for $9.99 per month with advertisements or $14.99 per month without ads. Gunnar did not say how much the merged streaming platform would cost users on Monday, but he did say Warner Bros. Discovery will provide both ad-free and ad-lite options.
“The direct-to-consumer business is obviously further along now than what we had four years ago,” Wiedenfels said. “There’s a greater risk, you want to get that right. Between the two direct-to-consumer products, by the time we close, close to 100 million people are going to be affected as we make those changes. So that will need some very, very detailed and disciplined planning.”
Following Discovery shareholders’ affirmative decision on Friday, Wiedenfels believes the $43 billion Discovery-WarnerMedia acquisition will close early in the second quarter. Variety has learned that the exact date range being targeted is April 11-28. And, once WarnerMedia is in Discovery’s hands, Wiedenfels anticipates a “blowout DTC product” combining HBO Max and Discovery Plus, as well as “some very nice marketing synergy right out of the gate” for the Discovery and WarnerMedia brands.
“The combination could not make more sense than what we’re doing here,” Wiedenfels said. “We have HBO Max, with a more premium, male-skewing positioning, and then you’ve got the female-positioning on the Discovery side. You’ve got the daily engagement that people enjoy with Discovery content versus sort of the event-driven nature of the HBO Max content. Take that together, I have no doubt that we will be creating one of the most complete, sort of four-quadrant, old-young-male-female products out there. And I’m really excited about it. I can’t wait to see the first combined direct-to-consumer metrics because, in theory, the acquisition power of HBO Max, combined with the retention power of the Discovery content I think is going to make for a blowout DTC product, and that should certainly drive very healthy revenue growth for years to come.”
“It’s important to remember that DTC internationally is going to be an exponentially better business for us than the linear world,” Wiedenfels said of the new company’s global strategy.
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