Breaking: Max Set to Raise Prices This Year as Further Cost-Cutting Hits Warner Bros. Discovery
Under David Zaslav, WBD has seen numerous painful rounds of cuts and price hikes, which don’t seem to be stopping any time soon.
Since merging Discovery and WarnerMedia in 2022, CEO David Zaslav has been almost singularly focused on slashing costs, increasing revenue, and paying down the more than $40 billion in debt that the combined company had just two years ago. In a new report from Blooberg's Lucas Shaw, sources indicate that Zaslav is looking to implement even more cost-cutting measures and increase streaming prices even more than he already has.
Key Details:
- CEO David Zaslav is looking to meet financial goals by combining cost-cutting and price-raising measures.
- WBD has been telegraphing a price increase for over six months; Max is already one of the most expensive SVODs on the market.
- As WBD fights to keep NBA rights, it will need to generate enough cash to pay roughly $2.5 billion per year.
It was nearly a year and a half ago when Warner Bros. Discovery's chief financial officer Gunnar Wiedenfels declared that the company was “done with that chapter,” referencing the painful period in which Zaslav led a Draconian series of content and personnel cuts that left many consumers, employees, analysts, and creatives frustrated and angered with the executive.
However, as WBD is locked in a fight to retain its NBA broadcast rights for what is expected to be more than $2.5 billion per year, Zaslav is now looking for ways to reach the financial goals and guidance that the company has set. According to Shaw’s reporting, that means that the CEO has tasked his deputies with identifying further money-saving maneuvers, including potentially eliminating additional jobs after more than 2,000 employees have been laid off over the past year.
In an effort to hit the streaming revenue target of $1 billion in 2025, WBD is planning on increasing the subscription prices for Max by the end of the year. Currently, the company’s flagship streamer run $9.99 per month for the ad-supported tier, $15.99 for the cheapest of the two ad-free options, and $19.99 for the Ultimate Ad-Free plan, which includes 4K resolution and up to four simultaneous streams.
WBD declined to respond to Bloomberg’s reporting, but did issue a statement.
“The company is focused on the long-term growth of the business overall, including Max,” the company said, “which has been a priority across WBD to expand the original content offerings for our streaming audiences including news originals from CNN, March Madness and NBA Finals from sports, local language content from international, and a new distribution deal with A24.”
Zaslav has been telegraphing this move since last fall when he spoke at the Goldman Sachs Communication and Technology conference on the heels of Max introducing original and simulcast CNN news programming and just one month before the platform introduced its Bleacher Report Sports Add-On that brought live sports from TBS, TNT, and truTV to audiences.
“We think that there’s meaningful opportunity as we add quality content to Max and as we launch it around the world to move on price,” Zaslav said. “We think that the value that we’re creating and the amount of value we’re creating that we can get more price.”
After launching the B/R Sports Add-On for free in October, WBD had initially intended to make it $9.99 in March to coincide with the start of the NCAA Men’s Basketball Tournament airing on TNT, TBS, and truTV. However, that change was delayed, with the price hike currently planned for sometime this summer; although, that is also far from confirmed. Between this eventual move and the planned fall launch of the sports streaming joint venture with Disney and Fox, WBD is looking for as many additional revenue opportunities as possible as it continues to climb uphill from the massive levels of debt that have plagued the company in recent years.
Despite reaching a streaming profit of $104 million during the final quarter of 2023, it appears that Zaslav and company are still aiming to cut their way to shareholder satisfaction. The question becomes whether or not the layoffs, content eliminations, and price increases eventually push away the 97.7 million streaming subscribers. Content cuts and ever-escalating prices have a tendency to increase churn for streaming services, whether or not Zaslav’s gamble to go back to that well once again will pay off as it has in the past will go a long way to determining the future of Warner Bros. Discovery.
Max
Max is a subscription video streaming service that gives access to the full HBO library, along with exclusive Max Originals. There are hubs for content from TLC, HGTV, Food Network, Discovery, TCM, Cartoon Network, Travel Channel, ID, and more. Watch hit series like “The Last of Us,” “House of the Dragon,” “Succession,” “Curb Your Enthusiasm,” and more. Thanks to the B/R Sports add-on, users can watch NBA, MLB, NHL, March Madness, and NASCAR events.