Not unexpectedly, Warner Bros. Discovery CEO David Zaslav’s big announcement at the quarterly earnings call of the company today was for a combined single SVOD service integrating Discovery+ and HBO Max.
Said service, for which they’re still deciding a name, will launch sometime in Summer 2023 in the United States, followed by an international rollout afterwards.
The rollout will first be in the markets where HBO Max has already launched, so Latin America will get it in late 2023, existing European markets in early 2024, key Asia Pacific territories in mid-2024, and new markets in late 2024.
The company anticipates adding more than 40 million subscribers by 2025, taking its total to about 130 million (up from 92.1 million at the end of June this year). Before that, Zaslav says the plan is to spend dramatically more on HBO Max in 2022 and 2023 than was done in 2020 and 2021:
“Quality is what matters. Quality is what Casey and that team is delivering. It’s the best team in the business. We’re doubling down on that HBO team. They’re all committed under contract, and we’re going to spend dramatically more this year and next year than we spent last year in the year before.”
He adds they remain committed to most of HBO’s original programming, with children’s programming and direct-to-streaming movies being the obvious exception.
At the same time, Zaslav made a firm commitment to the theatrical model today – soundly rejecting the business strategy employed by former WarnerMedia CEO Jason Kilar:
“We have a different view on the wisdom of releasing direct-to-streaming films, and we have taken some aggressive steps to course-correct the previous strategy.
When you’re in theaters, the value of the content and the overall viewing experience is elevated. Then when the same content moves to PVOD, and then streaming, it is elevated again.
As films moved from one window to the next, their overall value is elevated, elevated, elevated. We saw this clearly demonstrated with The Batman and Elvis.
Expensive films going to streaming … can’t find an economic value for it. We’ll always be agile, but the focus will always be on theatrical”
As a result, there will be no theatrical day-and-date experimentation with the HBO Max streaming service anymore. Warner Discovery CFO Gunnar Wiedenfels also highlighted the scrapped “Batgirl,” “Scoob!” sequel and “Wonder Twins” films as “examples that don’t fit in the streaming approach.”
The news, along with a whopping $3.4 billion in net losses, disappointing revenue, high debt and slower streaming growth than anticipated, did not resonate with investors as shares in the company fell sharply in late trading.
