They’ll come for the high-wattage HBO and Warner Bros. content. They’ll stick around for Discovery’s lifestyle comfort food.
That’s the formula that Warner Bros. Discovery executives hope will work for the integrated HBO Max and Discovery Plus services.
Gunnar Wiedenfels, CFO of Discovery, revealed March 14 at an investor conference that the company plans to combine the two streaming platforms along with the rest of Discovery and WarnerMedia when the $43 billion merger is completed next month. Wiedenfels talked up the strength of WarnerMedia’s IP and “retention power” of Discovery’s lifestyle content.
The big question is how much the combined platform will charge. Industry sources wonder how much higher HBO Max can go from its price of $14.99 ad-free or $9.99 with commercials. Discovery Plus is $6.99 without ads or $4.99 with, and it has indicated tiered pricing will continue. The good news for the combined entity is that it will be rich in content that is sticky with consumers.
“Fans are very loyal to genre when they’re deciding about streaming services: 62% of them say genre is key when deciding to subscribe or cancel,” says Perkins Miller, CEO of Fandom. “The combination of HBO Max’s deep fictional library and Discovery’s nonfiction content means a deep set of genres and should be a strong consumer combination, and very much drive Discovery’s merger thesis.”
One source close to the situation says while there has been focus on content, the underlying technology and user experience needs to be a top priority. The source adds that HBO Max “has had its fair share of hiccups along the way,” as when it has occasionally buckled under heavy user demand.
“If I were to prioritize, from the perspective of a consumer — and Discovery is obsessed with the consumer — I would say the consumer prioritizes streaming services in three particular parts, in order: price, user experience and then content,” one insider says.
Wiedenfels assured that the goal is to create “a great user experience for our subscribers.” It will take a lot of wizardry to bring together HBO Max and Discovery Plus and showcase all that content in a way that is not overwhelming.
“The main thrust is going to be harmonizing the technology platform, building one very, very strong combined direct-to-consumer product and platform,” Wiedenfels said. “That’s going to take a while.”