Yahoo Finance Warner Bros. Discovery launches 'Max' platform in bid for streaming dominance
Warner Bros. Discovery's (WBD) "Max" streaming platform is officially here.
The platform, which includes content from both HBO Max and Discovery+, launched on Tuesday with three different price tiers: $9.99/month for the ad-supported version, $15.99/month for the ad-free option, and a new "ultimate" ad-free tier for $19.99/month that allows four concurrent streams and 4K streaming options, according to the website.
With the exception of the new "ultimate" tier, those prices match up with current HBO Max pricing. Earlier this year, the company increased the cost of its ad-free plan from $14.99 a month to $15.99 in the US.
The company unveiled key details regarding the launch in April, with CEO David Zaslav saying at the time, "Max is the one to watch [because] it's the place every member of the household can go to see whatever they want at any given time."
The executive, who is looking to leverage the company's wide portfolio of assets to boost subscriptions, touted its strong storytelling IP from franchises like "Lord of the Rings" and "Harry Potter" to successful shows like "Friends" and "The Big Bang Theory."
Warner Bros. Discovery's streaming strategy will be paramount for the company, which has battled a slew of merger-induced challenges since the combination of WarnerMedia and Discovery in April of last year. The streaming business is a crowded field, with competitors like Disney (DIS), Netflix (NFLX) and Apple (AAPL) all vying for subscribers.
Earlier this month, the media giant saw streaming losses reverse in the first quarter as subscriber growth came in above consensus estimates. Warner Bros. Discovery reported direct-to-consumer adjusted EBITDA of $50 million in the first quarter, a $704 million year-over-year improvement on a pro-forma combined basis.
"We’ve come through some major restructurings and have repositioned our businesses with greater precision and focus," Zaslav said in the earnings release. "And we see a number of positive proof points emerging, with [direct-to-consumer] perhaps the most prominent."
Shortly following the results, Needham analyst Laura Martin told Yahoo Finance Live that WBD's cost-cutting initiatives have been "world class" and reiterated her bullishness on the potential success of its Max streaming offering.
"HBO churn is really high, but Discovery+ churn is really low [with] 'super fandom' content like 'Love It Or List It' or 'The Fixer Uppers,'" she said. "So I think putting those two services together should lower churn, bring more fandom, which should bring more pricing power. And you would have the upside of that really high-quality HBO Max content."
Martin added Max "could arguably be the most powerful streaming company," with HBO becoming just as sticky and popular as both Disney and Netflix.
J. Christopher Hamilton, an entertainment attorney and current Syracuse University professor, said it was inevitable for Warner Bros. Discovery to rebrand its streaming service following the AT&T spinoff — and that more changes will hit the media sector, including continued layoffs, content reevaluations, and big swings to capture new domestic and international markets.
“As things continue to change amongst the media and tech juggernaut [we will see persistent] cost-cutting, cost containment, and agendas that support business growth amid a declining US economy, a massive [Writer's Guild of America] labor strike and the slow death of cable and broadcast television," he said.
Warner Bros. Discovery like other media companies is grappling with a strike by Hollywood writers that has led to massive production shutdowns in the industry. Moody's has warned that if the strike goes on more than three months, some media companies could see their credit ratings suffer.
Over the weekend, Zaslav was booed by crowds while delivering the 2023 commencement speech at Boston University, with chants that included, "We don’t want you here," "Pay your writers" and "Shut up, Zaslav," according to The Hollywood Reporter.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com
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