Streaming video has evolved over the past several years into a volume game, with many providers embracing the motto “larger is better.” Competitors have been increasing expenditure even if earnings have declined in an effort to compete with streaming market leader Netflix, which has an unmatched collection of original content.
Warner Bros. Discovery (WBD -1.04%), which was established by the separation of WarnerMedia from AT&T and its subsequent merger with Discovery, entered the streaming arena at the beginning of last year. When Discovery’s CFO Gunnar Wiedenfels stated the business will combine the HBO Max and Discovery+ streaming platforms into a single entity early this year, resulting in a more comprehensive, more expensive service, executives raised questions even before the agreement was completed.
It appears that the business has changed its mind at this time.
a distinct service
According to The Wall Street Journal, Discovery has opted to keep providing Discovery+ as a standalone streaming service in the United States. This represents a significant change from the company’s initial intentions, which called for absorbing the less expensive service to build a brand-new, prominent business. HBO and Discovery+ programs would be available on the new service, which is still in the planning stages. This would allow for a new, more expensive price.
In comparison to HBO Max, which costs $15.99 per month, or $9.99 with advertising, Discovery+ now costs $6.99 per month, or $4.99 with advertisements.
To be clear, the business still intends to introduce a more comprehensive solution as early as this spring, however management has been mute over the cost of the combined service thus far. The new, yet-to-be-named supersized product from Discovery will provide a lot more material culled from both the HBO Max and Discovery+ services, and the company is banking that some customers will still be prepared to pay for it.
Furthermore, there is relatively little programming overlap between the two services as a result of their significant variances. Along with HBO’s renowned programming, HBO Max includes movies from Warner Bros. Studios and the Turner Classic Movies archive.
Later this year, Discovery also intends to introduce a free, ad-supported tier in an effort to increase the number of viewers from people who are unwilling or unable to pay for streaming. According to the article, the platform would provide a variety of programming, including material from the Warner Bros. Studios archive as well as material from HBO and Discovery.
achieving the ideal balance
According to statistics provided by Morgan Stanley analyst Benjamin Swinburne, streaming losses are really continuing to grow, with some of the top firms reporting total operational losses of more than $10 billion in 2022. Walt Disney’s direct-to-consumer products reported operational losses of $4 billion, while streaming losses are projected to have been $2.5 billion, $2.2 billion, and $1.8 billion for Peacock (owned by Comcast), Warner Bros. Discovery, and Paramount Global, respectively. The lone outlier, Netflix, made $4.5 billion in profit last year.
The company’s debt burden of more than $50 billion and the intense rivalry among streaming competitors remain obstacles for Discovery.
However, Warner Bros. has increased their selection by doing so.