‘No Sub Left Behind’; Warner Bros. Discovery Is Keeping discovery+ as Standalone Service to Avoid Losing Customers

If you were one of the people scratching your head as to why Warner Bros. Discovery decided to somewhat reverse course in order to keep discovery+ as a standalone streaming service when the company launches a new platform merging nearly all of its streaming content this spring, we finally have an answer.

WBD CEO David Zaslav addressed the issue during the company’s fourth-quarter earnings call, and — as we had expected — it essentially boils down to financials.

“For those that have {discovery+} right now, the churn is very low and it’s profitable,” he said. “Many of those people are going to want to move up to a bigger product, more robust with a bigger offering. Our strategy is ‘no sub left behind. We have profitable subscribers that are very happy with the product offering of discovery+. Why would we shut that off?”

During the call, Zaslav stressed how different discovery+’s viewership is from HBO Max’s. He said that while discovery+ is frequently watched for “hours a day,” it is done so “passively” and mostly “during the day or in fringe.” In comparison, families watch HBO Max more often in the evening.

HBO Max and discovery+ were set to merge this spring, and WBD had already started working on a new name for the combined service. However, WBD stated at the beginning of February that while most of the material from discovery+ would move to the new platform alongside HBO Max programming, the lower-priced lifestyle streamer would remain a standalone service.

The ad-free tier of discovery+ costs $6.99 per month, and the ad-supported tier costs $4.99 per month. HBO Max’s ad-free tier was raised from $14.99 to $15.99 per month, and the streamer with ads costs $9.99 per month.

The forthcoming combined streamer could easily cost at least $20 per month. HBO Max users probably wouldn’t have objected much, but for discovery+ subscribers, this would mean a price increase of up to 300% over what they were currently paying for just one service.

Although WBD does not disclose the number of subscribers to discovery+ alone, estimates indicate that this may have cost the company upwards of 20 million subscribers who do not subscribe to HBO Max. WBD reported 96.1 million subscribers across HBO Max and discovery+ during its earnings call on Thursday.

WBD is still struggling to recover from a severe financial hole caused by the merger. The combined business incurred costs and debts when WarnerMedia was acquired by Discovery in April 2022, totaling more than $5 billion. These expenses turned out to be more expensive than anticipated, and WBD has been taking numerous contentious actions to raise money to cover its debts.

Massive programming cuts on HBO Max are largely to blame for this controversy. It all started over the summer when WBD axed the nearly completed $90 Batgirl feature film and continued as HBO Max canceled shows en masse and removed titles from the streamer. WBD brass has promised the days of axing shows for tax write-offs are over.

WBD has also recently announced agreements with third-party services like Roku and Tubi to license content removed from HBO Max. Similar agreements between WBD and other streamers may come to pass, bringing the business additional income in the form of licensing fees and assisting it in getting its financial house in order.

To further monetize its library, the business also intends to introduce a free ad-supported TV (FAST) service in 2023.