Warner Bros. Discovery is reeling from the decline of traditional TV.
The network conglomerate reported $39.3 billion at the end of last year, a 4% dip compared to 2023. Ad revenue dropped 7% last year as streaming subscriber growth was “more than offset by domestic linear audience declines,” according to WBD’s earnings press release.
WBD’s survival depends on Max, its streaming service and lifeline in the intensifying streaming wars.
Last quarter alone, Max gained 6.4 million subscribers, bringing its total to nearly 117 million. And with a renewed focus on sports and content bundling, Max is on track to have “at least 150 million subscribers by the end of 2026, fueling further [ad] revenue growth,” CEO David Zaslav told shareholders during the company’s earnings call on Thursday.
To keep growing subs – and, subsequently, ad revenue – WBD will continue leaning on sports and content distribution.
The future of Max
Streaming advertising revenue is the antidote to WBD’s cable-related revenue declines. WBD’s streaming ad revenue rose 27% last quarter alone, driven by recent sign-ups for Max’s ad-supported tier. And WBD called out specific plans that should directly raise streaming ad revenue.
Global expansion, for example, has been a key priority in WBD’s plans to raise ad revenue. Earlier this week, WBD announced Max will launch in Australia on March 31. WBD plans to continue rolling out Max in Asian markets, too, which should help “build up the advertising revenue stream,” said JB Perrette, CEO and president of global streaming and games.
On the distribution front, WBD also emphasized deals with content distributors. WBD, for example, has been licensing some titles to other streamers such as Netflix and Disney. Amazon is also putting more focus on distributing other content, including WBD’s, on Prime Video rather than producing its originals.
More content distribution should help get Max content in front of more people, Zaslav said, which should in turn drive ad-supported subscriptions.
Zaslav put an emphasis on Max’s profitability for shareholders. As one of the profitable streaming services, he said, Max is “positioning us as a global media leader committed to providing shareholders with sustainable future growth.”
But money speaks louder than promises made during earnings calls. Advertiser budget commitments during this year’s upfronts will determine the value of Max over the next broadcast year.
