Warner Bros. celebrated its 100-year anniversary with the combined product from its recent union with Discovery. Call it a streaming reveal.
During a virtual press event on Wednesday, Warner Bros. Discovery (WBD) announced the birth of its new streaming service, Max, combining HBO Max and Discovery+ content offerings.
Max will be available for streaming in the US on May 23. The subscription tiers will be priced the same as HBO Max’s current offerings ($9.99 per month with ads or $15.99 per month without ads), with a new ad-free option that has better video quality for $19.99 per month.
On the engagement front, Max will include interactive ad units, such as pause ads and prompts for users to choose which version of an ad they’d prefer to see.
WBD is also pitching Max directly to subscribers by claiming it will have the lowest ad load, although it didn’t disclose what exactly that would be.
Speaking of HBO Max, the streaming app will either update to Max on May 23 or prompt the user to do so depending on the smart TV provider, transferring login, billing and viewing data automatically.
But there will be no change to the Discovery+ streaming app. Even though Max will have both HBO Max and Discovery+ content, Discovery+ still gets to remain a standalone service.
“Discovery+ has maintained a sizable and engaged user base, and it’s a profitable streaming service,” said Jean-Briac Perrette, president and CEO of Discovery’s streaming business, speaking at WBD’s press event. “And we don’t want to leave profitable subscribers behind.”
Discovery+ subscribers will get to keep their original subscriptions, although WBD will still try to pitch them on Max because it also includes content from HBO. Either way, WBD expects this dual revenue stream (Discovery+ and HBO Max à la Max, or just Discovery+) will be more profitable for the business overall than keeping HBO Max as a standalone platform.
HBO is a no-go
Perrette emphasized WBD’s recent commitment to focus on profitability as opposed to just scale.
So, what makes Discovery+ so much more profitable than HBO Max?
According to Perrette, four times as much content drives the majority of viewership on Discovery+ compared with HBO Max. Discovery+ subscribers tend to find most of their content by navigating through the service, whereas, on HBO Max, three-quarters of viewing sessions are based on what titles appear on the home screen.
“Simply put, people find and enjoy a ton more content on Discovery+ [than on HBO Max],” Perrette said.
Plus, HBO Max has higher churn rates than Discovery+, according to the company.
Although WBD is pitching Max as an improvement to what Perrette calls the “important shortcomings” of both HBO Max and Discovery+, it’s clear which streaming service is the favorite child.
Getting engaged
WBD plans to improve personalized content recommendations for Max, including suggesting what subscribers watch next based on their viewing preferences. Max will serve personalized hero images that recommend relevant titles to specific user profiles, too. Perrette said this level of personalization is a first for WBD’s streaming offerings.
Max will also have content libraries based on genre and network brands, such as Discovery’s HGTV and HBO’s DC, to help with content discovery.
Relationship maintenance
Planning for a boost in engagement is directly tied to WBD’s strategy to curb subscriber churn, which it claims mostly comes from HBO Max.
If WBD recommends content that subscribers are more likely to enjoy, then they’re less likely to cancel their subscriptions in favor of a different streaming service.
WBD is also planning new features to try holding onto what it calls “involuntary churners,” or subscribers who lose their subscription unintentionally, such as forgetting to update their payment information once their credit cards expire.
“HBO Max’s [current] ability to manage this type of churn is limited,” Perrette said. New features will notify users if their billing payment failed by displaying an alert right on their screen. (Which might make for a rather awkward viewing party.)
Just push play
Still, despite nixing HBO Max as a streaming service, WBD is still leaning on HBO content.
WBD plans to continue producing HBO Originals, including “A Knight of the Seven Kingdoms,” the first of three prequels to the “Game of Thrones” book series. Max will also have Max Originals, including a new movie called “The Penguin” based on the “Batman” series.
WBD is also using theatrical exclusivity to promote new movies on Max after they premier in theatres, starting with a new movie based on the DC comic book hero Shazam.
WBD CEO David Zaslav said to expect updates on Max’s news and sports content – in addition to more details about Max’s ad load – during WBD’s upfront next month.
The US will be the only region with access to Max in time for this year’s upfronts, followed by LATAM in the fall and Europe and Asia next year.
Stay tuned in May.
