This week marked the launch of Max – the rebrand and merging of HBO Max and Discovery+ into one app. Both under the Warner Brothers Discovery umbrella, the content from both into one place, with the promise of additional content and a better user experience.
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Why combine?
Over the past few years, the streaming market has become incredibly crowded. I remember in the not-so-distant past, having my subscription to Netflix and a Prime Video, just because it came with my Amazon Prime subscription. Now, with a family of 5 consuming video content, I couldn’t even tell you off the top of my head how many active subscriptions we have. In addition to the Netflix and Prime, we also have Disney+, Peacock, Paramount+, AppleTV, Hulu (I think). I’m not even entirely sure, but I know it’s too much.
In fact, I cancelled my HBO Max subscription recently because we weren’t actively using it anymore and I was making an attempt to reduce our subscriptions. The benefit of cord-cutting was that we were supposed to be saving money, right?
Right.
But, I guarantee there will be content in the next few months that will have us signing up for Max, for both its HBO content and its Discovery content. Shark Week anyone?
So bundling might work out well for consumers, granted subscription rates do not increase too much. The base cost for Max is actually the same as what existing subscribers pay for HBO Max ($10 per month) with one major change – ads. There are also ad-free options for HD and 4K Ultra HD, but they will run you $16 per month and $20 per month, respectively.
Not the only ones with this idea
Warner Brothers Discovery was not alone in thinking more eyes in one place is a good idea. After the number of streaming services grew and grew, and the struggle for an audience got harder, they are now trying to consolidate to get out of the red. The combined platforms will help cut down on content spending, which has been a recent focus for media companies as they look to make streaming profitable.
Disney announced earlier in May that Disney+ and Hulu would combine into one app by the end of the year. However, Disney+, Hulu and ESPN+ will still be offered as standalone options. It’s not yet clear how much a monthly subscription to the joint app will be, but prices will increase across the board for the standalones.
Disney announced this year it would cut $5.5 billion in costs, including $3 billion on the content side. But, Disney CEO, Bob Iger, is looking forward to the advertising opportunities the single app will provide. It’s “exciting,” Iger said. The single app, he said, will bring “greater opportunities for advertisers, while giving bundle subscribers access to more robust and streamlined content, resulting in greater audience engagement and ultimately leading to a more unified streaming experience.”
In addition, Paramount+ and Showtime will bundle into one app on June 27th. There will no longer be a standalone Showtime service. Instead, there will be an ad-supported plan, Paramount+ Essential, which will go from $4.99 to $5.99 per month, and its ad-free tier, Paramount+ with Showtime, which is set to jump from $9.99 to $11.99. Despite both plans getting a price increase, the ad-free plan is the only one combining Showtime content.
Will any of this make a difference?
The media companies are hopeful that plans like this will payoff in the long-run, as competition in the streaming world gets tougher. Executives fighting to attract new subscribers and reduce churn all agree that bundling really helps. Yet, overall, the streaming environment remains fragmented for viewers and most have said 2023 will be the year of peak losses. For example, Paramount has said it expects peak losses for its fledgling streaming service Paramount+ this year.
However, Warner Brothers Discovery does seem to have a jump on the competition. Streaming in the first quarter was positive with $50 million in EBITDA (earnings before interest, taxes, depreciation and amortization). CEO, David Zaslav, called it a “meaningful turn” and said streaming would be profitable for full-year 2023, a year earlier than anticipated.
All I know is I’m going to have to seriously re-evaluate my streaming choices.
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