Warner Bros. Discovery Climbs Over 103.3 Million Streaming Customers Amidst Disastrous Financial Quarter
After two quarters of streaming profitability, WBD lost $107M in the space last quarter.
It hasn’t been an easy road to profitability for Warner Bros. Discovery’s streaming business, but earlier this year, the company reported that it posted a modest $103 million profit in the segment. Two quarters later, that trend was reversed. On Wednesday, the company reported that its direct-to-consumer (DTC) segment lost $107 million during the second quarter, but was somewhat buoyed by a subscriber increase of 3.6 million customers across its streaming brands, bringing its global streaming base to 103.3 million.
Key Details
- Warner Bros. Discovery’s global streaming platforms climbed to over 103 million customers for the first time.
- In the United States and Canada, WBD lost 300,000 subscribers
- After two quarters of streaming profitability, a massive downturn in licensing lod to a $107 million streaming shortfall.
Following the first quarter of the year, WBD had a worldwide streaming subscriber total of 99.6 million, so the second-quarter increase represents a TK% TKTK. In the United States and Canada, WBD reported that as of June 30, Max and Discovery+ had a combined 52.4 million customers, a decline of 300,000 from the previous period. Internationally, Warner Bros. Discovery’s streaming subscribers rose from 46.9 million to 50.8 million.
On the financial side of its Q2 earnings report, WBD announced that its streaming average revenue per user (ARPU) had risen from $7.83 at the end of Q1 to $8. In the U.S., that total climbed to $12.08 from $11.72 at the end of March. Following two straight quarters of direct-to-consumer (DTC) profits, WBD’s streaming segment generated $2.568 billion which led to a streaming loss of $107 million.
According to WBD’s earnings report, the decline in streaming revenue seems to almost exclusively come from a significant downturn, not in the individual streamers themselves, but in the company’s licensing deals. The earnings report says specifically of the DTC finances, “Content revenue decreased 70%, primarily driven by lower volume of third-party licensing deals.”
Warner Bros. Discover has been pursuing licensing deals with as many streaming partners as possible over the past year, undoubtedly helping to bolster its bottom line. The company has had deals with premium streaming competitors like Netflix as well as withfree ad-supported platforms like Roku and Tubi. Industry analysts have long known that these deals, especially the ones with Netflix, have had significant impacts on the engagement of WBD titles, but now it seems clear that theses deals have also been instrumental on the company’s balance sheet as well.
Undeterred, at least publicly, by what can only be described as a disastrous quarter in which is company saw a $10.2 billion quarterly operating loss, WBD CEO David Zaslav put forth a positive spin in a statement that accompanied the earnings report.
“At Warner Bros. Discovery, our top priority is our global direct-to-consumer business and we are extremely pleased with the growing momentum we are seeing,” Zaslav said, “as demonstrated by another strong quarter of growth with 3.6 million net adds, fueled by our ongoing international expansion and investment in high quality, diverse content.”
However, whatever brave front that the executive puts on the situation is not enough to completely spin the situation. Zaslav also acknowledged that losses like these must lead to substantive changes across the board, and they need to be done quickly.
“In light of industry headwinds, we have and will continue taking bold steps,” he said, “like reimagining our existing linear partnerships and pursuing new bundling opportunities, with the goal to get Max on the devices of more consumers faster and at a fraction of the acquisition cost, and we are seeing clear evidence that these and other actions we are taking will help drive segment profitability in the second half of the year and into 2025 and beyond.”
While there have been financial bright spots for Warner Bros. Discovery on the streaming side of the business in recent quarter, other portions of the company have not been faring as well. The continued decline of WBD’s linear channels, which will likely only be exacerbated by the loss of NBA rights, have put a damper on the company’s forecast. So much so that Zaslav is reportedly exploring the possibility of spinning off the Warner Bros. movie studio and Max in order to silo them away from the $39 billion of debt that the company at large is responsible for. WBD is also reportedly considering selling off aspects of its business to increase capital.
Another way that the company is attempting to generate additional revenue is by partnering with Disney. Late last month, details were finally revealed for a historic bundle pairing Disney+, Hulu, and Max. At launch, the bundle will cost $16.99 for the ad-supported option and $29.99 for ad-free. Despite rate hikes announced by Disney on Tuesday, the recently announced prices for the Disney+, Hulu, and Max will not be impacted.
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.