In the wake of Warner Media''s merger with Discovery, HBO Max is experiencing some changes right now. Although the big news has been that the streaming service will eventually merge with Discovery Plus, some key executives point out that there may be price increases to come at some point in the future.
When talking at the Goldman Sachs Communacopia Tech Conference on Tuesday, Gunnar Wiedenfels, Warner Bros. Discoverys chief financial officer, suggested the situation, according to CNN. (opens in a new tab) Wiedenfels said that HBO Max and Discovery Plus are fundamentally underpriced, and that the company might have plenty of space to hike prices.
Wiedenfels believes this is based on the reliability of both services content libraries, and is off the back of HBO Max, which has received 38 Emmys more than any other streaming service. But that doesn''t include Warner Bros-made content for other services, such as Ted Lasso and Abbot Elementary, who also won awards at the show.
According to The Hollywood Reporter, Wiedenfels used House of the Dragon as an example of how HBO Max might utilize marquee content to attract viewers, indicating that 30 million people have already seen the first episode of the Game of Thrones spin-off, under the pressure of everyone who is preparing to tune in for the premiere episode.
Wiedenfels said both HBO Max and Discovery plus aren''t perfect, but that the merger will benefit them both, arguing that HBO Max has an impressive content offering and even a lot of must-have features, while Discovery Plus has a cleaner interface. So the possibility is that both services will be combined into (hopefully) something better.
The CFO emphasized another of Discovery Plus''s weaknesses, namely that it offers evergreen exposure. It may not be extreme buzz around major events that encourage people to get involved, but it has among the lowest churn rates in the industry.
In short, once people subscribe to Discovery Plus, they tend to stick around something Wiedenfels attributes to brands such as HGTV, Food, Magnolia, and Discovery itself. So, with an evergreen appeal, the Discovery Plus/HBO Max hybrid should still have appealing content even in instances where there are no big HBO shows on the air.
It''s all good and well, but it doesn''t alter the fact that Wiedenfels suggested potential price hikes. HBO Max already costs $15 a month without commercials (or $10 with them), making it one of the most expensive on-demand streaming services available. While Discovery Plus costs $5 a month with ads and $7 a month without them.
Combined, that is $15 to $22 a month, which isn''t quite valued for me. In fact, it''s pretty expensive, and more than youd pay for any other streaming service that didn''t include Live TV and that might be ads. Given the present cost of living situation, I can''t imagine subscribers would respond particularly well to the prospect of paying more.
However, Wiedenfels has confirmed that Warner Bros. Discovery has changed its mind since the merger, and that it isnt prioritizing subscriber growth rather than profitability. Instead, the company is doing the opposite, namely ensuring that its streaming business actually makes money.
While focusing on subscriber numbers is likely to be old world streaming thinking, it might not be worried the company if a few individuals jump ship. However, you have to see how it works out.