Discovery has confirmed its plans to combine its current streaming service Discovery+ and WarnerMedia’s HBO Max, into one streaming service rather than offer the two platforms as a bundle. Discovery’s CFO, Gunnar Wiedenfels, confirmed the strategy during the "Deutsche Bank 30th Annual Media, Internet & Telecom Conference" that Discovery is making preparations to combine the two streamers, marking the first time the company has actually revealed its post-merger strategy for Discovery+ and HBO Max, amid speculation they could remain solo platforms with bundling options.
Wiedenfels, who will also serve as CFO of the newly combined Warner Bros. Discovery, has said that the first step during integration will be some form of bundling while the new company figures out the best way to merge the two platforms. “One of the most important items here is that we believe in a combined product as opposed to a bundle. We believe that the breadth and depth of this content offering will be a phenomenal consumer value proposition. The question is, to get to that point and do it in a way that’s actually a great user experience for our subscribers, that’s going to take some time. Again, that’s nothing that will happen in weeks, hopefully not in years, but in several months, and we will start working on an interim solution in the meantime. So right out of the gate, we’re working on getting the bundling approach ready, maybe a single sign-on, maybe ingesting content into the other product, so that we can start to get some benefits early on. But the main thrust is going to be harmonizing the technology platform. Building one very, very strong combined direct-to-consumer product and platform, that’s going to take a while,” Wiedenfels stated.
Wiedenfels also added that the $43 billion WarnerMedia and Discovery deal is still expected to close in the second quarter. Discovery+ subscriptions start at $4.99 per month for the ad-supported model, with a price of $6.99 per month for the ad-free tier. HBO Max also has an ad-supported tier at $9.99 per month, while the ad-free model is $14.99 per month. Discovery+ has 22 million subscribers, while HBO and HBO Max combined have 73.8 million global subscribers.
“The combination could not make more sense than what we’re doing here. We have HBO Max, with a more premium, male-skewing positioning, and then you’ve got the female-positioning on the Discovery side. You’ve got the daily engagement that people enjoy with Discovery content versus sort of the event-driven nature of the HBO Max content. Take that together; I have no doubt that we will be creating one of the most complete, sort of four-quadrant, old-young-male-female products out there. And I’m really excited about it. I can’t wait to see the first combined direct-to-consumer metrics because, in theory, the acquisition power of HBO Max, combined with the retention power of the Discovery content I think is going to make for a blowout DTC product, and that should certainly drive very healthy revenue growth for years to come,” Wiedenfels said.