What the HBO Max Merger Means For Streaming

EFilm Twitter, which was a bit earlier this week, became agitated upon learning that Warner Bros. Discovery (WBD), had cancelled the movie’s release Batgirl. The DC Comics movie had filmed for seven months with a reported budget of $90 million—and now, thanks to the apparent finger snap of an executive, it was vanishing into thin air. Other observers noticed that some movies streamed only on HBO Max. The Witches And Locked downThis streamer was quietly taken down by. There were rumors that this was a sign of much bigger moves. It was rumored that WBD would soon kill HBO Max and that WBD would shut down other fan-favorite programs like PeacemakerSignificant layoffs were expected.

But these worst-case scenarios failed to materialize at the company’s earnings call on Thursday. WBD instead announced that HBO Max would be merged with Discovery+ streaming platform and a number of other important shifts. The main messages from the conference call and their implications for the future direction of an industry in streaming that is much less stable than last year are here.

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Your favorite HBO Max show isn’t getting axed—yet

The upheaval at HBO Max this week sparked a massive backlash among Hollywood’s creatives who felt that their work was being disregarded. But while many predicted the ensuing demise of other HBO Max shows, WBD CEO David Zaslav called the HBO brand “one of the great crown jewels of the company,” and pledged to “embrace and support and then drive the incredible success that HBO Max is having.” That would suggest that acclaimed HBO Max shows like Hacks, The flight attendant And Peacemaker For now, they are considered safe.

Zaslav, who assumed his role after the merger of WarnerMedia and Discovery this past spring, also seemed to rebut the recent reports of massive incoming layoffs to HBO’s staff, saying, “The majority of the people on Casey [Bloys, the head of HBO and HBO Max]’s team have been locked up.” However, CFO Gunnar Wiedenfels did say that some Turner shows were in danger of being canceled; he did not specify which ones.

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But prestige is no longer HBO’s top priority

For decades, the name HBO has been associated with prestige and craftsmanship: a place where auteurs could take big swings even if they weren’t immediately profitable. While Zaslav said the word “prestige” many times on the call, the moves that he’s made in the past few months reveal a different approach than his HBO predecessors. Zaslav has been tasked with paying down billions of dollars in debt, and said that in April that “each and every decision will be made through the lens of analyzing asset value.”

Last month, HBO decided not to move forward with J.J. Abrams’ sci-fi series DemimondeThe budget for the show was over $200 million. Tim Westcott, a media analyst at OMDIA, says that greenlighting the show would have been “the kind of thing you’d have expected HBO to have done without being too concerned about the bottom line a couple of years ago. But clearly, the management has changed, and he’s got a much more cost-conscious approach.”

HBO Max, which announced it was streaming many shows from Chip and Joanna Gaines this week, has been named by HBO MaxFixer UpperWhile they might not receive critical accolades, their broad appeal and high viewership more than compensate. On Thursday’s call, Zaslav announced that the duo will be far from the only Discovery+ natives joining the HBO Max family: all of the content on that platform (including The Dr. Pimple Popper This is Zit And How are Toddlers and Tiaras Doing?() will merge into one, unnamed streaming service.

Wiedenfels presented the fusion and talked about the fact that Discovery+’s audiences were different from those of HBO Max. The slide that was attached to the fusion was accused of being sexist on social media.

You’ll be able to stream for free (with ads)

Wiedenfels indicated that the merger between Discovery+ and HBO Max will first take place in the U.S. during the summer of 2023. Rollouts elsewhere in the world would follow. Wiedenfels stated that there would be three payment tiers for the new service: one free with ads, another with low ads and finally, one premium with no ads. The announcement came on the heels of Netflix’s decision to add a lower-cost subscription with commercials.

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Film lovers need to return to the theaters

Analysts predicted that the era of streaming movies, where viewers could watch movies on their couch, would be possible after movie theaters were closed due to the pandemic.

Zaslav firmly rejected that narrative on Thursday, saying the company would “fully embrace theatrical.” He says the company will no longer release films on streaming at the same time as in theaters, and that streaming-only projects like Batgirl Their strategy would exclude this possibility. “This idea of expensive films going to direct to streaming: we cannot find an economic case or value for it,” he said. (Netflix has just approved a second installment to the $200 million-plus original. Gray Man Action thriller.

Wiedenfels added that the cancellation of projects that were already in production—like Batgirl, Scoob: Holiday HauntAnd The Wonder Twins—were “difficult decisions, but we are committed to being disciplined about a framework that guides our content investment for maximum return.”

Superheroes, forever

Given the astonishing global success of the Marvel Cinematic Universe, perhaps it isn’t surprising that WBD wants to replicate it with its DC Extended Universe. Zaslav actually said that the company is in the midst of building out a 10-year plan modeled after Kevin Feige’s at Marvel—so get ready for a whole lot more of Wonder Woman, Aquaman, and the rest of the Justice League gang. “As we look at the opportunities we have broadly, DC is top of the list for us,” Zaslav said.

Zaslav mentioned even the embattled future The Flash movie as one of the films he was “very excited” about. (The Flash’s star Ezra Miller has had several run-ins with the law recently.) Explaining the reason for the decision to axe Batgirl, Zaslav said: “We’re not going to release a movie unless we believe in it…Our job is to protect the DC brand.”

It’s the big tent strategy that wins

How should streaming services differ from traditional media companies? This question has been addressed by different streaming services. Disney+, for example, has focused on programming that is family friendly (though Hulu and ESPN+ are different), while Netflix is trying to be as broad as possible.

The combination of Discovery+ with HBO Max shows that the two-lane model isn’t feasible for big corporations. WBD believed that pairing HBO Max with Shark Week would make them more profitable despite a study that showed that HBO Max had the highest satisfaction rate among their customers. It seems that with every new earnings call, the certainty that we’re headed back toward a cable package-like world increases.

Westcott, the analyst, says that it has become clear that most people won’t pay for more than a few streaming subscriptions, especially with “inflation, the threat of recession, and people having less money in their pockets.” He points to the fact that in Europe, titles across Paramount Pictures, Peacock and Universal are already getting bundled together rather than having to compete with one another.

WBD’s moves continue that trend—and also reveal the increased importance of courting not just a well-off U.S. subscriber base, but the entire world. “Netflix, Apple and Amazon are global platforms in a way that HBO perhaps wasn’t: the U.S. was still by far its major market,” Westcott says. “So when you’re developing a content plan for a streaming service, you have to think about the international market as well.”

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