‘No sub left behind’; Warner Bros. Discovery is keeping Discovery+ as a standalone service to avoid losing customers – The Streamable

If you’re one of the people scratching your head as to why Warner Bros. finally have an answer.

WBD CEO David Zaslav addressed the issue during the company’s fourth quarter earnings conference call, and – as we’d expect – it basically boils down to finance.

“For those who have {discovery+} now, the turnover is very low and it’s profitable,” he said. “Many of these people will want to move to a bigger, more robust product with a bigger offering. Our strategy is ‘no sub left behind’. We have profitable subscribers who are very satisfied with the Discovery+ product offering. Why would we turn that off?”

During the call, Zaslav emphasized how Discovery+’s viewership differs from that of HBO Max. He said that while Discovery+ is often observed “hours a day”, it is done “passively” and mostly “during the day or on the sidelines”. In comparison, families watch HBO Max more often in the evenings.

HBO Max and Discovery+ were supposed to merge this spring, and WBD had already started work on a new name for the combined service. However, WBD stated in early February that while most Discovery+ material would be moved to the new platform alongside programming from HBO Max, the lower-priced lifestyle streamer would remain a standalone service.

Discovery+’s ad-free tier costs $6.99 per month, and the ad-free tier costs $4.99 per month. The ad-free tier of HBO Max has increased from $14.99 to $15.99 per month, and the streamer with ads is $9.99 per month.

The next combo streamer can easily cost at least $20 a month. HBO Max users probably wouldn’t have objected too much, but for Discovery+ subscribers, that would mean up to a 300% price increase over what they currently pay for just one service.

While WBD doesn’t just disclose the number of Discovery+ subscribers, estimates indicate that this may have cost the company more than 20 million subscribers who don’t subscribe to HBO Max. WBD reported 96.1 million subscribers on HBO Max and Discovery+ during its conference call on Thursday.

WBD is still struggling to recover from a severe financial hole caused by the merger. The combined businesses incurred costs and debt when WarnerMedia was acquired by Discovery in April 2022, totaling more than $5 billion. These expenses turned out to be more expensive than anticipated, and WBD has taken several litigation actions to raise money to cover its debts.

Massive programming cuts on HBO Max are the main culprits for this controversy. It all started back in the summer when WBD canceled Batgirl’s nearly completed $90 feature and continued as HBO Max canceled shows en masse and removed titles from the streamer. WBD’s brass promised that the days of tax write-off programs are over.

WBD also recently announced deals with third-party services like Roku and Tubi to license content removed from HBO Max. Similar deals between WBD and other streamers could happen, bringing additional revenue to the business in the form of licensing fees and helping it get its financial house in order.

To further monetize its library, the company is also aiming to launch a free ad-supported TV (FAST) service in 2023.

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