Will HBO Max and Discovery+ Merge Under Warner Bros. Discovery? – Television

Discovery, Inc. shareholders approved the acquisition of WarnerMedia on Friday, checking off the final (meaningful) formality in the formation of mega-company Warner Bros. Discovery. While the newly created corporation is still weeks or possibly months away from launching, one of the biggest questions top of mind today is what will become of respective streaming services HBO Max and Discovery+?

On the surface, there appears to be very little natural synergy between Max and Discovery+. The HBO streaming platform is the home to prestige TV and Warner Bros. blockbuster movies; Discovery+ is chock full of unscripted programming about home renovation, cooking, and hastily marrying someone from another country whom you met on the internet.

It is fair to assume the two services will “come together in some way,” one insider with knowledge of the general plans, who spoke on the condition of anonymity, told IndieWire on Friday. That’s as much as anyone really knows right now — and we don’t just mean within the general public or the media. WarnerMedia, still a division of AT&T for now, and Discovery, Inc. executives have not really been allowed to engage in detailed business conversations during this quiet period amid the regulatory and shareholder-approval processes.

One likely scenario, especially in the early going, is that Max and Discovery+ will be bundled in some way and not actually combined into one service. Bundling, the practice of tying several platforms together via one (generally modestly discounted) package, is certainly nothing new to Discovery and its chief, David Zaslav, who will run Warner Bros. Discovery.

Discovery and Zaslav have long been the defenders of the cable bundle, combining the likes of Discovery Channel, TLC, Animal Planet, HGTV, Magnolia Network (f.k.a. DIY Network), Science Channel, Food Network, ID, OWN, Cooking Channel, Trvl Channel, Motortrend, and more into one collection of channels, which is sold to your cable television provider (who passes on the combined carriage cost to you).

Phil Caruso / HBO Max

A cord-cutter’s current alternative is to subscribe to much of that same programming via Discovery+, a fairly cheap SVOD service starting at $4.99 per month with ads or $6.99 without. WarnerMedia’s HBO Max, meanwhile, will run you $9.99 monthly with ads or $14.99 (the same as linear HBO) without. Thanks in large part to the relatively inexpensive cost for Discovery+, a potential bundle with Max (especially an ad-supported one) should not be rejected by the marketplace on a pricing basis. For an example from the competition, an HD Netflix subscription now runs $15.49 per month; an Ultra HD plan costs $19.99 monthly.

Since we’re merely speculating about the bundle at this point, we wouldn’t want to venture much of a specific guess about its theoretical price point — but figure a few bucks cheaper per month than subscribing individually. For another example from the crowded streaming landscape, the Disney Bundle, a combination of Disney+, Hulu, and ESPN+, costs $13.99 per month (or $19.99 per month without ads on Hulu). Individually, Disney+ costs $7.99, Hulu costs $6.99 (or $12.99 without ads), and ESPN+ costs $6.99.

Should Max and Discovery+ remain separate platforms, whether or not there is a bundle option, one logical way of delineating programming between the two of them could be scripted (HBO Max) vs. unscripted (Discovery+). Or maybe Max takes the higher-level programming, keeps the substantially higher price point, and brings home all the Emmys. Any attempts at creating a clear distinction may be moot at the future Warner Bros. Discovery.

Perhaps HBO Max and Discovery+ will just be folded into one service — probably one with broader Warner Bros. branding. That’s likely a ways away for a number of reasons. For starters, what happens to linear HBO if the streaming version suddenly imports the entirety of the Discovery programming universe? It’s not an impossible problem to solve, but certainly different price points would be required to reflect the relative amounts of available content. Otherwise, traditional HBO would be DOA.

“Irvine vs. Taffer” on Discovery+

Discovery+

And then there’s the tech. The lift to turn two established standalone SVOD services into one would not be a particularly light one. But JB Perrette, the head of Discovery’s streaming operations, is making lemonade out of those lemons. He also provided the clearest clue thus far about the end goal.

In early November, on Discovery’s third-quarter earnings conference call, Perrette said he and his colleagues are performing “essentially an audit of both platforms,” and spoke of “re-platforming…in one direction or the other.” Perrette called the two services “an incredibly attractive tech buffet” from which executives will mine “the best of both to decide how we move into a common platform going forward.”

Either option, a combination or a bundle, provides real monetization opportunities for the soon-to-be Warner Bros. Discovery. Fewer than half of U.S.-based Discovery+ subscribers are also subscribed to HBO Max, Zaslav said on the November conference call. HBO and HBO Max ended 2021 with approximately 73.8 million total combined global subscribers. Discovery ended the year with 22 million streaming subscribers, of which the vast majority comes from Discovery+.

“Assessing the overlap in respective subscriber bases, at least here in the U.S., we believe less than half of Discovery+ subscribers are also HBO Max subscribers,” Zaslav said, “which with the right packaging, provides a real opportunity to broaden the base of our combined offering.”

There’s that “combined” word again. The WarnerMedia-Discovery merger is expected to close in the second quarter (March-June) of 2022.

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