Discovery which is about to become Warner Bros. Discovery within the next month, when its merger with AT&T’s WarnerMedia closes — has confirmed its plans to combine its current streaming service Discovery Plus and WarnerMedia’s HBO Max into one service, rather than offer the two platforms as a bundle.
Discovery CFO Gunnar Wiedenfels, who will also serve as CFO of the newly combined Warner Bros. Discovery, said Monday during the Deutsche Bank 30th Annual Media, Internet & Telecom Conference that Discovery is making preparations to combine the two streamers, marking the first time the company has actually revealed its post-merger strategy for Discovery Plus and HBO Max, amid speculation they could remain solo platforms with bundling options. But before they are combined, Wiedenfels says the first step during integration willbe some form of bundling, while the new company figures out the best way to merge 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 currently costs $4.99 per month with ads or $6.99 without ads and accounts for the bulk of Discovery’s streaming sub total, which the company reported to be 22 million worldwide customers at the end of 2021. For HBO Max and HBO, last year ended with a combined 73.8 million global subscribers. HBO Max is priced at $9.99 per month with ads and $14.99 a month as an ad-free service. On Monday, Gunnar did not give guidance regarding how much the combined streaming platform would cost consumers, though he did note Warner Bros. Discovery will introduce both ad-free and ad-lite products.
“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.”
Per Wiedenfels, the $43 billion Discovery-WarnerMedia deal is still set to close early in the second quarter, following Friday’s approval vote from Discovery shareholders. Insiders tell Variety that the specific time frame being targeted is April 11-28. And once WarnerMedia is officially in Discovery’s hands, Wiedenfels looks forward to a “blowout DTC product” with the combination of HBO Max and Discovery Plus and thinks there will be “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 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.”
Speaking about the new company’s global outlook, Wiedenfels said “it’s important to remember that DTC internationally is going to be an exponentially better business for us than the linear world,” the area that Discovery is traditionally used to dealing in.
Via: Variety.com
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