The deal between AT&T’s WarnerMedia and Discovery, while a shocking development, looks perfectly complimentary on paper. The strategic importance with regard to each company filling the other’s gaps is obvious.
According to Anjali Midha, co-founder and CEO of Diesel Labs, a predictive content analytics platform, “WarnerMedia content outperforms in terms engagement, owning 8.7% of all new titles (shows and movies) coming out this year and generating a huge 20.2% share of engagement. Discovery outperforms in terms of volume, owning a remarkable 17.2% of all new titles this year (thanks in part to the launch of Discovery+ earlier this year), but generating just under 1% of all engagement.”
Discovery+ has been doing great. The young platform has taken full advantage of its parent company’s deep reserves of natural history and nature programming, not only surpassing 15 million subscribers early in the year but also serving up some decidedly unique content in the form of Immersions, a new channel featuring meditative nature programming.
WarnerMedia’s HBO Max is no slouch either. The service topped all the competitors in new subscribers for the first quarter of 2021, and will be offering an ad-supported tier in early June.
With regard to content, more than half of Discovery’s programming released over the past few years has been placed firmly in the unscripted or “reality TV” category. WarnerMedia, on the other hand, is severely lacking in that department. A hot commodity thanks to its low production costs but persistent popularity, reality TV programming only makes up about 3% of the company’s catalog.
Diesel Labs also reports that WarnerMedia viewers tend to be younger, with 40% of their audience under 25, and more than half of them male. Discovery, on the other hand, tends to bring in older, female viewership, with only 20% of its audience under the age of 25.
The deal between the two companies means that WarnerMedia and Discovery will own more than a quarter of all new shows and movies this year.
In spite of so much momentum, power, and hype, the ultimate success of this merger may come down to how these companies intend to package and serve so much discordant content.
While Disney has worked wonders bringing Disney+, Hulu, and ESPN+ to viewers with bundled packages due to so much crossover appeal between platforms, Discovery and WarnerMedia’s audience compartmentalization may work against them depending on what they have planned.
According to Diesel Labs, “the WarnerMedia and Discovery audiences only overlap modestly with 3.9% of people engaging with content from both companies.”
Frankly, the data shows that WarnerMedia viewers who were jumping up and down over “Zack Snyder's Justice League” may not have much use for Discovery’s “90 Day Fiance,” and vise versa. This means that bundling options, a quick and convenient way for streamers to gain subscriptions and therefore viewers, may not be the most strategic path to success for the two companies moving forward.
While Hulu is fully expected to eventually get rolled into Disney+, the notion of the entirety of WarnerMedia and Discovery’s content packed into one all-inclusive platform is a bit harder to imagine for the time being, and the numbers suggest that it might not be in either media company’s best interest to see “Game of Thrones” listed alongside “Say Yes to the Dress” any time soon.