May 25, 2022

Following the news last week that Discovery’s shareholders approved a merger with WarnerMedia, which will become one of America’s largest media companies, there have been signs that the merger will be a corresponding direct merger of the company. streaming services. HBO Max and Discovery+. Discovery CFO Gunnar Wiedenfels said this morning that the companies plan to combine the two streaming services into one offering. But since these changes will take time, they plan to offer some kind of temporary solution.

It is less clear how this solution could look more specific.

“So we’re working on a bundling approach right away, maybe signing in, maybe adding content to another product, etc. so we can get some benefits quickly,” Wiedenfels said on Monday. presentation. Deutsche Bank’s 30th Annual Media, Internet and Telecommunications Conference.

“But the main driving force will be the harmonization of the technology platform, the creation of a highly combined consumer-facing product and platform, and this will take some time,” he said. The director also noted that companies would benefit more directly from the ability to streamline service marketing, which he says is currently costly.

The $43 billion merger, expected to close in the second quarter and currently approved by both the US and the EU, will see the new Warner Bros. Discovery has grown into a powerful media empire that includes HBO/HBO Max, CNN, Warner Bros. (television and film studios), DC Films, TBS, TNT, truTV, Cartoon Network/Adult Swim, Turner Sports and more, including Discovery’s HGTV, Discovery Channel, Discovery+, Food Network, TLC, ID, Travel Channel, Animal Planet, Science included . A channel known to OWN and other traditional cable TV subscribers. When the deal closes, the new media company will be led by Discovery CEO David Zaslav, while Wiedenfels will continue to serve at the combined company as chief financial officer.

At this morning’s event, Wiedenfels suggested that a combination of the two streaming services would better reach both the male and female demographics than the services alone.

“We have HBO Max with a more premium male odd position, and then you have a female position on the Discovery side,” he said. “You have the everyday interaction that people enjoy with Discovery content, as opposed to the eventful nature of HBO Max content. When we combine this, I have no doubt that we will create one of the most complete types of old, young, male and female four quadrant products. ,

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Wiedenfels sheds more light on a company’s mindset when it decides to bundle rather than bundle services as a long-term strategy. While acknowledging that Disney has had success with its package so far, the company became convinced that it wanted to bring “full firepower” to the solution, which included a “200,000 hour content portfolio” that included valuable titles, with new ones quickly disappearing. decision was . The best way to be competitive.

Both services have solid subscriber numbers in their own right, with HBO Max reaching 73.8 million globally by the end of 2021 and Discovery+ reaching 22 million.

The CFO said the combo service, which will eventually arrive, will offer ad-supported and ad-free levels, as HBO Max has already had success with that model.

“It helped us a lot. I’m glad to know that Disney has come to the same conclusion,” Wiedenfels said. “There is a certain part of the population that is ready to pay the price. Part of the population is still willing to pay less for a place and does not advertise. He said that these users don’t actually find a few minutes of ads a hindrance, which was surprising.

“Therefore, it is very likely that this structure will be there when we enter the market,” he said.

The time it takes to bring the combined offering to market will take more than weeks, the company says, but it will take months rather than years to achieve what it expects.

Pricing for future services has yet to be announced, but HBO Max is $9.99 per month with ads or $14.99 per month without ads, and Discovery+ is $4.99 or $6.99 for ad and ad-free tiers, respectively. per month.

Prior to this merger, there had been little consolidation in the live streaming industry as the growing competitiveness of live streaming is impacting existing ones. For example, Netflix has seen less subscriber growth than in recent years. Now he is trying to add value to his services by adding mobile games to increase and retain customers. Meanwhile, Disney is increasing subscriber numbers by making its Hulu/Disney+/ESPN+ package more attractive and making some of its pricier add-ons part of its base package. Paramount+ has also decided to consolidate services by adding Showtime to its consumer-facing service starting this summer.

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