Streaming giants HBO Max and Discovery+ will merge together to form one single service, reported Variety Magazine on Thursday.
The media company announced that the two services, HBO Max and Discovery+, will launch in the US as a single monolith service in the summer of 2023, according to JB Perrette, CEO and president of global streaming and games for Warner Bros. Discovery (WBD), speaking on the company’s Q2 earnings call.
“At the end of the day, putting all the content together was the only way we saw to make this a viable business,” Perrette said. Bringing HBO Max and Discovery+ together is aimed at cutting churn so “there’s something for everyone in the household,” he was quoted as saying.
Warner Bros. Discovery did not announce what the new brand name for the merged service will be, nor did it discuss pricing for the streaming service.
Warner Bros. Discovery is focused on the ad-supported and ad-free versions of the combined HBO Max-Discovery+, Perrette said, but is also “exploring how to reach customers in the free, ad-supported space” with content that is totally different from what’s on the premium Video On Demand services.
Speaking about branding possibilities and about brand value and retention, Perrette was quoted as saying how HBO may or may not be part of the name of the unified direct-to-consumer WBD platform, but that the company is doing research on consumer perception of the HBO Max name.
HBO will continue to be a major brand, he explained.
“HBO will always be the beacon and the ultimate brand that stands for television quality,” he added on the call.
The merged HBO Max-Discovery+ will combine the best elements of both services, said Perrette.
HBO Max has had “performance and customer issues” but offers a rich set of features; Discovery+ has more limited features but provides a more robust underlying delivery infrastructure.
After the summer 2023 rollout in the United States, WBD plans to take the unified HBO Max-Discovery+ platform to Latin America in the fall of 2023; Europe in early 2024; Asia Pacific in mid-2024; and additional markets in fall 2024.
In the second quarter, WBD’s HBO Max, HBO and Discovery+ total subscribers added up to 92.1 million, up 1.7 million from 90.4 million the prior quarter. That’s up 22%, 75.8 million, on a pro-forma basis versus a year earlier.
By 2025, WBD aims to have grown to have 130 million global streaming subscribers and that its direct-to-consumer businesses will generate $1 billion in earnings before interest, taxes, depreciation and amortization (EBITDA).
Perrette said the company expects EBITDA losses for the streaming division to peak in 2022, with long-term margin potential of 20% or more.
Currently, HBO Max is available for $14.99/month without ads and $9.99/month with ads in the U.S. Discovery+ is priced at $6.99/month without ads and $4.99/month with ads.
The company had previously announced intentions to combine the two flagship streaming platforms - HBO Max from the legacy WarnerMedia (spun off from AT&T) and Discovery’s Discovery+.
Ahead of the close of the deal forming Warner Bros. Discovery, CFO Gunnar Wiedenfels in March broadly mapped out a strategy to combine the streamers, saying that initially it would sell the pair as a bundle before fully integrating them.
The merged HBO Max-Discovery+ mammoth will combine together thousands of hours of programming, a varied library of scripted, reality and documentary content - looking a bit like a mini cable TV bundle.
In its first step towards unifying HBO Max and Discovery+ on the content side, WBD announced that Chip and Joanna Gaines’ Magnolia Network programming will be coming to HBO Max this September, while also remaining on Discovery+.
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