Warner Bros. Discovery reached 97.6 million DTC subscribers in the first quarter

Warner Bros. Discovery’s global direct-to-consumer subscribers increased 1.6 million to 97.6 million at the end of the first quarter of the year, in comparison with the 96.1 million subscribers the company had at the end of fourth quarter, according to the group’s latest earnings results.

One of the company’s biggest bets in the period, “The Last of Us,” is now averaging nearly 32 million cross-platform viewers per episode in the United States, and is the most-watched show in the history of HBO Max in both Europe and Latin America.

Regarding financials, during the period, the group reported revenues of US$10.700 million. Net loss available to Warner Bros. Discovery was US$1.069 million, and included US$1.810 million of pre-tax amortization from acquisition-related intangible assets and US$95 million of pre-tax restructuring expenses. The first quarter total adjusted EBITDA was US$2.611 million, while adjusted EBITDA increased 12% ex-FX compared to the prior year quarter, on a combined basis.

Furthermore, in the first quarter of the year, Warner Bros. Discovery was the number one most-watched Total TV linear portfolio among P25-54 viewers, driven by the broadcast of the NCAA March Madness tournament, and had 6 of the top 10 cable networks in prime.

“It is an important time for Warner Bros. Discovery. We have come through some major restructurings and have repositioned our businesses with greater precision and focus. And we see a number of positive proof points emerging, with DTC perhaps the most prominent,”  commented David Zaslav, President & CEO of Warner Bros. Discovery.

“The key here is our streaming business is no longer a bleeder,”  Zaslav also told analysts. “It is hard to run a business when you have a big bleeder. And so getting this business under control, focusing on what people love to watch, how do we create content that people love? Now, as we launch Max, we will be able to nourish and delight subscribers with the greatness of HBO.”

●  THE MAX RELAUNCH

According to Parrot Analytics’ latest report, the company’s path to long term viability lies in executing the Max relaunch, more efficiently tapping its existing franchises like the DC Universe, “Harry Potter” and “The Lord of the Rings,” all of which would help set up M&A action with a competitor in the coming year or two.

The upcoming Max rebrand is a crucial part of David Zaslav’s content optimization strategy heading into the rest of 2023 and beyond. Adding the majority of Discovery+’s content with HBO Max is a cost-effective short term scaling effort that should put Max on the level of Netflix and the Disney bundle as a top three general entertainment streaming option.

In fact, Parrot Analytics data shows that Max is poised to immediately overtake Netflix as the SVOD with the highest total catalog demand with US audiences. Discovery+ series will be new to most HBO Max users and are largely WGA strike-proof. They could prove to be a highly valuable asset if the strike lasts into the late Summer or early Fall.

Parrot Analytics also noted that Warner Bros. Discovery has a relatively underutilized, albeit very expensive, scaling strategy that has worked wonders for its competitors: fully tapping current IP into exclusive content on its own platforms. Zaslav has already announced preliminary efforts to expand two relatively dormant franchises with proven high value IP: “Harry Potter” and “The Lord of the Rings.” This is the exact kind of IP that is ripe for expansion into new series and movies. If executed correctly, it can both bring in new fans while also tugging at millennial heartstrings, Parrot says.