Warner Bros. Discovery will merge its HBO Max and Discovery Plus services into a single streaming platform, as part of a plan to hit 130 million paying subscribers by 2025 in the highly competitive market.
The HBO Max and Discovery Plus merger aims to cut subscriber losses with a broad offering that has “something for everyone in the household,” said Jean-Briac Perrette, Warner Bros. Discovery’s global streaming chief. The company also proposed the idea of a free streaming service that would be supported by advertisements.
The firm plans to launch the merged streaming service in the United States next summer, then in Latin America later that year. Europe and the Asia Pacific will follow in 2024.
Warner Bros. Discovery’s 2025 target of 130 million paying subscribers would be an increase of more than 40 percent from the combined 92 million subscribers it has on HBO Max and Discovery Plus. Netflix said last month it has 220 million paying subscribers worldwide. Disney Plus said in May that it has around 138 million subscribers globally.
Warner Bros. Discovery will aim to make the new streaming service profitable in the United States in 2024 and for its global streaming segment to generate $1 billion in revenue by 2025, Perrette said. No name or pricing system for the new service was announced.
Warner Bros. Discovery was formed in April, when AT&T’s WarnerMedia unit and Discovery completed their merger, and started with some $55 billion in debt. As Zaslav’s team looks to compete with the likes of Netflix and Disney and move to profitability, it has also scrapped some inherited projects — like when it pulled the plug on CNN Plus in April, less than a month after the service was launched.
During the earnings call Thursday, Zaslav also reaffirmed that Warner Bros. Discovery would make “a strategic shift” away from releasing films directly to streaming, saying that the approach made less long-term financial sense than releasing films to theaters. “This idea of expensive films going direct to streaming, we cannot find an economic case for it,” he said.
Those remarks came after one investor asked why the company had canceled the release of “Batgirl.” The $90 million film — with Leslie Grace in the title role and featuring Michael Keaton as Batman more than 30 years after he first donned the cowl — was canned alongside “Wonder Twins” and “Scoob!: Holiday Haunt” because of Warner Bros. Discovery’s new strategy.
The cancellations could also allow for a potential tax write-off, according to a Variety report, and come amid complaints from HBO Max users that certain shows have been abruptly removed from the service.
“Our focus will be on theatrical,” Zaslav said. “And when we bring the theatrical films to HBO Max, we find they have substantially more value.”