HBO Max and Discovery+ Will Be Bundled, Then Merged Into a Single App
Discovery CFO Gunnar Wiedenfels says the mega-merger of Discovery and WarnerMedia is on track for a mid-2022 closing and will lead to a bundling of streamers discovery+ and HBO Max, followed by an eventual combination of the two into one platform.
Wiedenfels told the Deutsche Bank Annual Media, Internet & Telecom Conference that following the merger of AT&T’s Warner Bros. with Discovery, there will be an early bundling of discovery+ and HBO Max, followed by eventually combining both streaming services into one platform. Since the plans of the merger haven’t been fully ironed out yet, the two services will be bundled in the meantime so the company can reap from the benefits of the combined content.
“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.”
On top of the combined traditional linear business with Warner and Discovery’s combination of entertainment (scripted and non-scripted), sports, and news (CNN), the company is likely to “sustainably grow revenues and free cash flow for many, many years to come.”
The combination of streaming services, with the subscriber acquisition power of HBO Max and customer retention power of Discovery+ content, will “make for a blowout DTC (direct-to-consumer) product and that should certainly drive very healthy revenue growth for years to come,” he said. “I mean we’re talking about a 200,000-hour content portfolio with some very, very valuable and successful new titles dropping at a pretty impressive rate. And putting that all into 1 is the way to go for us.”
Although Gunnar did not outright state how much the combined streaming platform would cost, he did mention that WarnerMedia-Discovery will introduce ad-free and ad-lite products. He said, “the second point we’ve already made is we will most definitely come out with an ad-free and an ad-light tier. That’s worked very, very well for us. I was glad to hear that Disney has come to the same conclusion. It’s just straightforward. 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 place and really doesn’t care about advertising…”
Wiedenfels also added that the $43 billion WarnerMedia and Discovery deal is still expected to close in the second quarter.
discovery+ is a video streaming service that offers more than 55,000 episodes of 2,500+ current and classic shows from several popular TV brands including Discovery, Investigation Discovery, HGTV, TLC, Food Network, A&E, Lifetime, and History.
The service primarily focuses on non-fiction programming or “reality” TV shows.
discovery+ is available with limited ads for $4.99 / month or ad-free for $6.99 / month.
HBO Max has two tiers, an ad-supported plan for $9.99 and ad-free plan for $14.99. HBO Max without ads also includes features like the ability to download offline and 4K streaming.
They also will get Max Originals that aren’t available to HBO channel subscribers, like “The Flight Attendant” (Kaley Cuoco), “Love Life” (Anna Kendrick), as well as reboots to “Sex In The City” and “Gossip Girl.”