On the morning of Monday, Mar. 14, Discovery CFO Gunnar Wiedenfels set details on the unification of HBO Max and Discovery+ on the heels of the duo's $43 billion merger. Last week, Discovery shareholders accepted the merger with WarnerMedia after various international regulatory hurdles were overcome in February.
While there are still some necessary roadblocks before all is set in stone, the formation of the two enterprises will mark creation of the most prominent US-based media company, with Warner Bros. Discovery encompassing everything from Discovery's catalog alongside CNN and HBO content. The two must now realize a communicative approach to its streaming platforms, which Wiedenfels aptly details amid Deutsche Bank's 30th Annual Media, Internet, & Telecom Conference.
Wiedenfels initially denotes a potential in drip-feeding Discovery content into HBO's platform, coining this as a "bundling approach" as it currently stands. With more time, the two streaming apps will find a "harmonizing" intersection, which Wiedenfels describes as the most poignant approach, "...building one very, very strong combined direct-to-consumer product and platform." He adds the latter concept will, of course, take some time before it's rightly fabricated.
The Discovery CFO likewise highlights key concepts that the merger and its future will afford for both brands under one umbrella. For one, marketing constraints will become entirely more optimized and enhanced under Warner Bros. Discovery, due to less costly constraints for pushing out ads on its services. The duo will likewise benefit, according to Wiedenfels, in demographics.
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"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," Wiedenfels explains. "Take that together, I have no doubt that we will be creating one of the most complete sort of four-quadrant sort of old, young male, female product out there."
Together, the two can topple the likes of Disney+, which recorded 42.9 million domestically and 41.1 million internationally following Q1 2022 subscriber numbers. HBO Max has a recorded 73.8 million global subscribers, with Discover taking home 22 million at the close of 2022. While nowhere near Netflix's global 221 million subscribers, also recorded at the close of 2021, the reach for the merged Warner Bros. Discovery will prove interesting to watch long-term.
Pricing for the amalgamated service remains unclear, but Wiedenfels notes similar structuring to prominent platforms with an ad-included and ad-free tier subscription option. He relays that this pricing has "worked well for us" and cited glee in Disney's own adoption of the concept for its streamer.
"There's a certain part of the population that's willing to pay the premium price. There is another part of the population that's willing to pay a lower price and really doesn't care about advertising," Wiedenfels explains.
With HBO Max base-priced at $9.99 and its premium offshoot at $14.99 per month, it's not hard to see a service that's at or around $19.99 or lower with all the bells and whistles. Discovery+ currently opts for a more strategic price point of $4.99 and $6.99 monthly, so the added value might be more in what content said user prefers to have over the overall service. Wiedenfels did not specify pricing just yet, but it is arguably among the most important aspects the duo will have to test to perfection.
Consolidation has been at the forefront of 2022, not merely in the streaming world but the gaming industry, as well. As Disney is driving numbers into the stratosphere with Star Wars and Marvel content on top of bundling options with ESPN, Hulu, and Disney+, Netflix is seeking the aforementioned gaming sphere for diversification. The streamer is attempting to drive subscription numbers with the introduction of mobile games to its platform.
