Get all your news in one place.
100’s of premium titles.
One app.
Start reading
The Street
The Street
Business
Michael Tedder

HBO Max Aims to Ramp Up Rivalry With Netflix, Disney+

AT&T's (T) HBO Max launched two years ago during the summer, right as the world was starting to accept that the pandemic lockdown was going to be a long-term situation and people were grateful to have as much stuff to watch as possible. 

For years, HBO’s on demand service HBO Go enabled subscribers to watch the channel’s slate of original television series and specials, plus whichever films were being featured on the channel at the moment. 

But after AT&T acquired WarnerMedia in 2016, the new parent unveiled plans to build a media group that could give Netflix (NFLX) a run for its money. 

HBO had long defined itself as a highbrow, prestige brand, and a decade ago it was considered a bit out of character for the network to take a chance on a knowingly trashy series like “True Blood.” 

But to stay competitive in the streaming wars, AT&T decided to use its biggest brand name while offering up a broader-skewing array of content. HBO could still do its fancy stuff, but now the brand would also have to cater to consumers who wanted comfort-food reality and parents who needed cartoons to distract the kids.

The first step was to get everything in the Warner portfolio – which included everything from CNN to the Cartoon Network to TBS to TV shows Warner developed for networks such as NBC – into one place. 

While it sometimes felt a bit strange to see a classic HBO series like “The Sopranos” offered next to a CNN cooking documentary and a TBS prank show like “Impractical Jokers,” the something-for-everyone-approach seemed to work just fine.

HBO Max had 73.8 million global subscribers as of the end of 2021, making it the third-biggest streaming service overall, behind Netflix (222 million) and Disney+ (DIS) (118.1). That’s not bad at all, and certainly, Comcast's (CMCSA) Peacock and CBSViacom's (VIAB) Paramount+ would love to have those numbers, but HBO Max’s new owners have a plan that might help it get to triple digits soon (and it's worth noting that HBO counts its cable subscribers among those numbers)..

What Does Discovery Have Planned For HBO Max?

Last year AT&T said it planned to spin off WarnerMedia to Discovery Inc., (DISCA) which owns Discovery Channel, Animal Planet, TLC, Food Network, HGTV, and Travel Channel.

Last week Discovery’s shareholders formally approved the deal, which will see AT&T formally spin-off WarnerMedia, to be merged with Discovery. The resulting company will be named Warner Bros. Discovery.

As part of the merger, AT&T holders will receive an estimated 0.24 share in the new company for each AT&T share held. AT&T stockholders will end up owning 71% of the new Warner Bros. Discovery, with Discovery shareholders holding the rest.

The deal is expected to formally close in the second quarter of this year, and the new bosses already have big plans. 

Discovery Chief Financial Officer Gunnar Wiedenfels is set to become the new CFO of Warner Bros. Discovery. And at the Deutsche Bank 30th Annual Media, Internet & Telecom Conference, he said that eventually, HBO Max would merge with Discovery’s streaming platform Discovery+.

Discovery+ currently houses hit reality shows including “Property Brothers,” “90 Day Fiance” and the “Iron Chef” franchise, as well as the specials Oprah Winfrey produces for her network. It had 22 million worldwide customers at the end of last year.

“One of the most important items here is that we believe in a combined product as opposed to a bundle. … We believe that the breadth and depth of this content offering is going to be a phenomenal consumer value proposition,” Wiedenfels said, according to Variety. 

“The question is, in order to get to that point and do it in a way that’s actually a great user experience for our subscribers, that’s going to take some time. Again, that’s nothing that’s going to happen in weeks — hopefully not in years, but in several months — and we will start working on an interim solution in the meantime.”

While fully combining HBO Max and Discovery+ will take some time, Wiedenfels said, the company is considering options such as “maybe ingesting content into the other product,” i.e., putting Discovery shows on HBO Max, or maybe vice versa, or offering a single log-in for both products. 

How Much Will the New HBO Max Cost?

A number of details, including price points, still need to be worked out. 

Discovery+ currently costs $4.99 a month with ads or $6.99 without. HBO Max recently announced an advertising-supported tier priced at $9.99 a month, opposed to the $14.99 a month ad-free service. The new price for the combined service has not been announced yet, but Warner Bros. Discovery has indicated that there will be both ad-free and ad-supported versions.

Also unclear is whether Discovery+ will be faded out, as HBO Go eventually was, or if HBO Max will be renamed in any way to reflect the change. 

But what is clear is that HBO Max, or whatever it will be called, will eventually get a massive injection of new content and subscribers, which will help the company reach a consumer base that’s more into cooking competitions than prestige dramas. 

The merger might not help it overtake Disney or Netflix, but it could go a long way to getting the subscriber total to three digits. 

Sign up to read this article
Read news from 100’s of titles, curated specifically for you.
Already a member? Sign in here
Related Stories
Top stories on inkl right now
One subscription that gives you access to news from hundreds of sites
Already a member? Sign in here
Our Picks
Fourteen days free
Download the app
One app. One membership.
100+ trusted global sources.