Discovery CEO: ‘Inspired’ by Amazon-MGM Deal; Excited About Upcoming HBO Max Ad-Supported Tier
A virtual conference held by J.P. Morgan allowed Discovery CEO David Zaslav to share a few opinions about the previously imminent and now very-much-happening purchase of MGM by Amazon, as well as the plans that Discovery has with regard to its own recent merger with WarnerMedia.
As far as competitor Amazon’s acquisition of MGM is concerned, Zaslav comes across as inspired by the implications of the purchase, clearly seeing it as validation for their new deal with AT&T. He referred to WarnerMedia’s legacy and said that their portfolio is “the greatest treasure of global IP that’s loved by everyone in the world,” and said, “You look at the value of MGM and you say, ‘Wow. What does that mean we’re worth if we can make this come together?’ And we think we can.”
Amazon put up nearly $8.5 billion to grab MGM, home of James Bond, Rocky Balboa, The Hobbit, and other well-loved, legacy franchises. Looking at WarnerMedia’s own roster of iconic properties like the DC Universe and Harry Potter, it’s easy to see why Zaslav is patting himself on the back.
Discovery+’s “ad-lite” tier has been a hit, with Zaslav admitting last month that he was surprised that viewers would be willing to tolerate commercials being that an ad-free experience is one of the many benefits to streaming subscriptions.
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 US$4.99 / month or ad-free for US$6.99 / month.
However, that has not been the case with the ad-tier option providing a big boost to the platform, surpassing 15 million subscribers in the first quarter of 2021.
Zaslav hopes to continue that trend with HBO Max. The platform will be available in an ad-supported version starting next month for $9.99 and will reportedly have the lightest ad load among all of its competitors.
Zaslav sees advertising revenue and the company’s strategy with regard to ad placement as a factor that sets them apart from their giant rivals, giving them a unique competitive edge.
“As we scale this up, you have these three great companies, you have Netflix and Disney and you have Amazon looking to be more global and maybe this MGM transaction will help them do that. If a portion of our scale … is ad-light and we’re a global platform of scale that’s ad-light, that’s a really unique differentiation. Advertisers, I think, will be really excited about that opportunity.”
Through the conference, Zaslav remained cheerily optimistic about the company’s outlook. While not sharing any insight into whether or not bundled or combined services might be on the way or how Discovery and WarnerMedia might work to overlap their disparate audiences, he remains open-minded.
“We’re going to learn a lot over the next year,” he said. “We have some great plans for what we think we want to do.”
HBO Max has two tiers, an ad-supported plan for US$9.99 and ad-free plan for US$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.”