AVOD Will Gain More Than 3x the Viewers of Subscription OTT in 2023
by Frankie Karrer
3 Min Read
What the merger tells us about the current and future states of streaming services.
5 Min Read
Some say opposites attract when it comes to love, but does this statement hold true for streaming content? HBO Max and Discovery+ will soon learn.
Earlier this year, when WarnerMedia and Discovery came together to form Warner Bros. Discovery, there were talks of eventually merging HBO Max and Discovery+ into a single service. In an earnings call with investors on August 4th, Warner Bros. Discovery leadership announced summer 2023 as the official launch period for the combined platform.
HBO Max and Discovery+’s content libraries don’t seem to be particularly cohesive. That said, there is more to the merger than initially meets the eye.
In order to understand the full picture of why HBO Max and Discovery+ are merging, we need to go back in time. The decision was put into motion by AT&T who previously owned WarnerMedia. Last year, AT&T announced that it would merge WarnerMedia and Discovery. And, as mentioned previously, the two officially came together as Warner Bros. Discovery in spring of 2022. This left Warner Bros. Discovery with two disparate, yet established, streaming platforms with a combined 92.1 million global subscribers.
“At the end of the day, putting all the content together was the only way we saw to make this a viable business,” JB Perrette, CEO and president of global streaming and games for Warner Bros. Discovery, told analysts. Perrette also spoke to curbing subscriber losses with a unified platform that offers “something for everyone in the household.”
While HBO Max and Discovery+ won’t become a single entity until next year, some programming has already started to shift. To start, HBO Max removed six Warner Bros. movies including “Moonshot” and “An American Pickle.” HBO Max has also begun to move away from kid-friendly content, canceling two films that were already well along in production—”Batgirl” and a new Scooby Doo feature called “Scoob!: Holiday Haunt”.
On the flip side, select content from the Magnolia Network (former HGTV darlings Chip and Joanna Gaines’ channel), currently streaming on Discovery+, will be available on HBO Max as soon as Sept. 30. Fans of the Gaines family can look forward to watching the following on HBO Max: “Fixer Upper: Welcome Home,” “Magnolia Table with Joanna Gaines,” and all five seasons of the original “Fixer Upper.”
This merger appears to be creating a bit of a content identity crisis for Warner Bros. Discovery. As company leadership itself highlighted in an earnings call last week, the platforms have fairly different content offerings. On what has become a rather infamous slide, Warner Bros. Discovery labeled the platforms “unique & complementary”, using terms like “scripted”, “lean in” and “home of fandoms” to describe HBO Max, and “unscripted”, “lean back” and “home of genredoms” in reference to Discovery+.
However, the shift away from family-friendly content indicates something else—Warner Bros. Discovery is trying to hone in on its ideal audience’s wants. Along with pulling “Batgirl” and “Scoob!: Holiday Haunt”, HBO Max has decided to pause new live-action kids and family programming as well as unscripted content. HBO Max will continue to develop its scripted content (think “Succession”, “And Just Like That” and “Barry”) and Discovery+, who offers beloved reality shows like “90 Day Fiancé” and “Deadliest Catch”, will drive unscripted programming. This strategy could help to win over subscribers ahead of next summer’s launch, with the promise of a unified streaming platform where a primarily adult audience can get its scripted and unscripted content fix in one place.
A broad content offering can appeal to a wide variety of subscribers, but it can also polarize or confuse loyal viewer bases. Some streaming services are already battling with this conundrum.
As Variety reported, “Disney+, for example, has earned a reputation for offering family-friendly fare and programs parents and kids can watch together. The service has even gone so far as to tell advertisers that it will not accept ads for alcohol or political campaigns when it launches a commercial-supported tier later this year. But that hasn’t stopped Disney from adding adult-skewing superhero fare like “Deadpool” or “Jessica Jones” to its library… And despite the availability of robust parental controls, Disney+ for many parents is supposed to be a venue that doesn’t require them.”
Another interesting piece to the HBO Max and Discovery+ merger is the consolidation of services, rather than fragmentation that we’ve previously been seeing in the industry. When streaming services first came to popularity, they were a great alternative to pricey traditional TV subscriptions. But as more streaming services pop up, consumers are becoming overwhelmed by the number of subscriptions and the mounting costs. In fact, Nielsen found that 64% of consumers are hopeful that there will be more bundled streaming packages in the future, while only 9% think that there is no need for such options. The new HBO Max and Discovery+ platform will cater to these viewers, potentially leading to an increase in new subscribers and a decrease in subscriber churn.
Other streaming heavyweights have attempted to address the customer want for fewer streaming services by offering content bundles. Disney currently provides customers with the option to bundle Disney+, Hulu Live TV, and ESPN+. And, platforms like Amazon Prime and Paramount+ offer the ability to add select services (like Showtime) to existing packages.
Moving forward, it is vital for key players in the streaming world to note if other streaming services follow suit and what the long-term results of content consolidation might be.
While we can’t predict the future, it is unlikely that this merger will affect advertisers negatively. If anything, it could prove a positive for many brands as they will still be able to target specific audiences on any HBO Max or Discovery + network. And, with a more refined content library on the consolidated platform, advertisers may actually be able to target consumers with even more precision than they can now.
If advertisers utilize a CTV ad buying platform like MNTN Performance TV, mergers like this one don’t need to be a concern. With Performance TV, brands can consistently reach target audiences wherever they’re watching, no matter how streaming services reposition their channels and offerings.