Warner Bros. Discovery Chief Financial Officer Gunnar Wiedenfels provided a few hints on Tuesday about how the entertainment giant envisions relaunching its streaming services under one flagship platform next year: Don’t expect to see any marquee names like Food Network vanish when the service rolls out.
Wiedenfels told investors at the Goldman Sachs Communacopia + Technology conference in San Francisco that the company has no plans to come up with generic verticals within the streaming platform that dumps content into buckets separating films from reality programming. Instead, WBD will leverage all of the brand names as a way to keep consumers happy — and fuel streaming subscriber growth internationally where some of the television content is already broadcast on linear television.
No, he didn’t provide any details on what Chief Executive David Zaslav is thinking about for a name for the combined streaming service that will rival Netflix and Disney+ in terms of size and reach. But it now seems less likely the “Discovery” name will take a starring role when a combined HBO Max and Discovery+ launches in the U.S. as a single service next summer.
“We have all these household names that are known internationally,” Wiedenfels said. “We’ll talk more about the specifics strategy at a later point. There’s a lot of value that we have these brands, and I think there’s a lot to be gained that these are established very powerful names in the market.”
Among the established brand names are Food Network, TLC and Discovery Channel on the Discovery side. Warner Bros. has banked on the iconic film studio’s fare.
Both the HBO Max and Discovery+ services have a combined subscriber base of 92 million, with about four million of that an overlap. The company has internally forecast growing the new service to 130 million subscribers within the next few years — and that the streamer will be profitable by 2025.
But there’s a big job ahead, he said.
Right now, Warner Bros. Discovery is focused on operational steps that will merge all the services together — and will chase that with adding CNN and Turner’s sports offerings to the platform later on. The technology continues to be a sticking point for studio management.
“What’s guiding our decision making is that we wanted to get it right the first time and provide an amazing consumer experience,” Wiedenfels said, pointing to the 4.7 out of 5 rating for Discovery+ on Apple’s App Store versus HBO Max’s 2.1 rating. “Unfortunately, both products are not perfect right now.”
He reiterated what most consumers have already found out: HBO+ “has an amazing content offering” but lacks “some technical depth.” Though, WBD did relaunch a technical overhaul of the service in August. On the Discovery side, he said the streamer has a “cleaner user experience.”
And that’s exactly what the discussions have been at internal integration meetings at the studio, but Wiedenfels sees this as an opportunity where both of the major services compliment one another. He pointed to how HBO so far scored scored 30 million viewers for “House of the Dragon” and the division’s slate of top-tier content like Monday’s Emmy champion “Succession.”
“The thesis right now is these are perfect compliments,” he said.
“HBO can drive millions of people to the platform. But, it also drives a higher churn rate. If you can’t get them into daily viewing habits, they are going to leave,” he said. “Discovery is one of the lowest churn rates in the industry. But, traditionally with Discovery brands its harder to get the extreme buzz that drives millions to the platform.”
Zaslav has already stated that the company isn’t exactly going all in with regards to streaming. The company is still fiercely protecting the theatrical window between when a feature film hits cinemas and then is made available to stream. And the company, in keeping content spending down, will make the same kind of strategic business decisions when growing outside North America.
Analysts have long been saying that international growth is the only way the major streaming services can gain ground. Netflix launched in 2007 with absolutely no competition, and therefore became the industry standard. However, today there are over 200 streaming services worldwide.
With this kind of saturation, there are some global markets where WBD may want to roll out the new streaming service and others where it makes sense to license content to other providers.
“We are optimizing for a long-term sustainable business,” he said.