Warner Bros. Discovery has confirmed that it will merge its HBO Max and Discovery+ services into a single streaming platform next year.
During a quarterly earnings call on Thursday, CEO David Zaslav said the combined services will launch next summer, with release planned for Latin America, Europe and other markets through 2024, as the company hopes to reach 130 million subscribers by 2025.
The new Subscription Video on Demand (SVOD) service includes the full libraries of both streaming platforms and has an ad-free, ad-lite and a free-with-ads version.
“With regard to streaming, our main priority now is to launch an integrated SVOD service,” Zaslav said during the call.
“Once our SVOD service is firmly established in the market, we see real potential and are exploring the possibility of a fast or free ad-supported streaming offering that gives consumers who don’t want to pay a subscription fee access to great library content, while also providing a gateway to our premium service.’
But while praising the new services, which are yet to be named, Zaslav remained silent about the company’s plan to find $3 billion in savings that will lead to layoffs.
Warner Bros. Discovery CEO David Zaslav, pictured, confirmed the merging of the HBO Max and Discovery+ services into one streaming platform next summer
HBO Max, which has 73.8 million subscribers, will see its library merge with Discovery+
Warner Bros. executives haven’t said what the new streaming service would be called, but the new platform will have an ad-free, ad-lite and a free-with-ads version
The merger of the two services, following the completion of Discovery’s $43 billion acquisition of AT&T’s WarnerMedia in a deal announced in May 2021, was long overdue.
The merger comes as a number of other cost-cutting measures appeared to be taking effect, including a shocking announcement of the scrapping of the $90 million DC Batgirl girl movie.
Other signs of ‘distress’ have also occurred with production shutdowns and removal of content in search of tax write-offs.
HBO Max is also said to have discreetly removed six original movies from the streamer.
“Everyone at Warner Bros. Discovery is nervous right now, and [they’re] are starting to look at alternative job options in case they get the axe,” an insider said the cover.
“It sounds like they’re not doing HBO Max scripts anymore, with HBO taking over, so less scripted programs overall.”
“All I know is they’re turning HBO Max into HBO, and there will be layoffs,” she added.
The layoffs are said to be the main source of the layoffs to come, something Zaslav and other business leaders have been practicing before when they shut down the long-running CNN+ streaming service a day after launch.
The Batgirl movie is ‘canned’ by Warner Bros. after spending over $90 million on the film as studio executives want to distance themselves from projects made for streaming
Under previous CEO Jason Kilar and in part as a pandemic response, the studio rolled out day-and-date releases in 2021, opening movies simultaneously in theaters and on HBO Max.
Movies, such as “Batgirl,” would be produced exclusively for HBO Max.
Warner Bros. had committed to making movies that could go straight to HBO Max, as part of an effort to boost subscribers in the increasingly crowded streaming industry.
The decision, motivated in part by the need to bypass Covid hit theaters in 2021, was unpopular among creatives and appears to have been reversed after partnering with Discovery.
The share of Warner Bros. Discovery fell more than 31 percent from its original price in April
Over the same period, Netflix saw huge losses as its stock fell by 36 percent. In the past six months, the stock has fallen more than 42 percent
Paramount, which operates its own streaming service, has seen its stock drop 30 percent since April. The stock is currently down more than 15 percent since February
This year, Warner Bros. back to exclusive cinema windows for at least 45 days before movies shipped to HBO Max.
Zaslav said the company would shift its focus to attracting top storytellers for its TV and film projects and commit to theatrical releases, where more money can be made.
“That’s why most people got into this business—to be on the big screen when the lights went out,” Mr. Zaslav said. “That’s the magic, and the economic model is much stronger.”
The change comes as streaming services have seen lackluster performance in Wall Street, with Warner Bros. Discovery is down more than 31 percent from its original price of $25.50 in April.
During the same time, Netflix saw its stock plummet about 36 percent, while Paramount’s shares also saw a drop of about 30 percent.