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WBD CFO Thinks discovery+ Reality Shows Will Keep You Subscribed When HBO Max Prestige Shows Go on Hiatus

Ben Bowman

Whether you like it or not, HBO Max and discovery+ are merging early next year. If you’re a fan of Emmy darlings and reality TV, this news is a treat. If your interests skew heavily one way or the other, you’re probably looking at a price hike for content you don’t want. And the Warner Bros. Discovery leadership team is just fine with that.

Speaking today at the Morgan Stanley TMT Conference, CFO Gunnar Wiedenfels laid out a strategy that seems to dilute the value of HBO Max - a service The Streamable chose as the best of 2022.

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Die-hard HBO fans have been fearing the impending merger, saying they have no interest in reality TV. But Wiedenfels believes those reality shows will keep people from leaving the platform.

“The ability to attract subscribers with the tent-pole HBO content and then make sure that we retain
them after the end of the season is a huge priority,” Wiedenfels said. “And our discovery+ content lends itself to that like nothing else.”

Is that true? Is there overlap between fans of “Succession” and the fanbase of “Sister Wives”?

HBO has always struggled with retaining its audience in the offseason. Marquee shows like “The Sopranos” sometimes took two years off between seasons, and there’s not always a reason to stay tuned while waiting for the next show to arrive.

Wiedenfels said he believes there’s “good churn” and “bad churn.”

“What I would qualify as ‘good churn’ is the fact that HBO always brings in massive amounts of new subscribers,” he said. “And naturally, you won’t be able to retain every one of them, right? So in a way, in an ironic way, it’s a measure of the quality.

“We know for a fact we have very low churn on discovery+. We have very high levels of daily engagement across our content, and that’s always been the core thesis for the quality of that combined portfolio. I, frankly, think there’s no better content offering in the world than the combined HBO Max and discovery+ content portfolio.”

However, the last time discovery+ offered standalone subscriber numbers, the service had just 24 million earlier this year. The most recent combined discovery+ and HBO Max global number was 94.9 million. While it’s possible a good chunk of those subscribers overlap, there is a decidedly pro-HBO tilt to the number.

If discovery+ has low churn, that locks in reality fans, but should we expect that viewers inclined to cancel HBO Max after the finale of “House of the Dragon” will stick around because they find something comparable on the discovery+ side of things? “Halloween Cookie Island,” “Naked and Afraid,” and “My 600-lb Life” aren’t going to keep those users subscribed.

The more likely scenario is that fans of HBO shows will continue to drop off the platform when the season of their show ends, while those who stick around will face a higher price tag.

Opening the Library

Part of what has made HBO Max so compelling is that it has an exclusive library that stretches back to the dawn of film. But it sure sounds like those old movies and shows are about to break free.

“We’ve got a deep library of content. We know we need to make sure that there’s as little in the way between new consumers and our content,” Wiedenfels said “And we’re not going to tell you whether you have to come through our own app or whether you want to come through an Amazon Prime Video channel, whether you want to use something on linear. We’re going to be open to all those forms of distribution.”

HBO Max abandoned 5 million subscribers last year when it left Prime Video, so its return would be a welcome development for fans of that platform.

But beyond wider availability of HBO Max through different services, it sounds like Warner Bros. Discovery is going to nudge a little to the “arms dealer” side of the streaming wars, which opens the possibility that previously exclusive shows and films may return to other platforms like Netflix or Hulu. “Why would we not be opportunistic about certain monetization streams?” Wiedenfels asked rhetorically.

CEO David Zaslav has also spoken repeatedly about launching a FAST product to compete with services like Pluto TV and Tubi. While this will all be good for consumers, it certainly erodes the value of what HBO Max used to be.

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The future of the NBA on TNT (and other Warner Bros. Discovery properties) has been a hot topic lately. Wiedenfels said that any future deals will need to include streaming rights to some degree.

“We’re not going to go after trophy assets or pay ridiculous prices just because we want to have
something,” he said. “The one thing that’s clear is paying price increases for sort of a pure-play linear deal at this stage in the ecosystem, I don’t think would be in the best interest of our shareholders.”

Propping Up the Platform

Wiedenfels admitted the HBO Max platform is a pain to navigate.

“The reality is the platform right now is just not operating at its best possible performance,” he said. “We’ll fix that five to six months from now. Hopefully, we’re going to be in a very, very different world and then we have both ingredients, the outstanding content and outstanding technological user experience as well.”


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