A new streaming service will combine HBO Max and Discover+. In featuring both "Shark Week" and "Game of Thrones," it hopes to devour its competition. Credit - AaronP/Bauer-Griffin/GC Images
Earlier this week, Film Twitter spiraled into an unhappy frenzy upon hearing the news that Warner Bros. Discovery (WBD) had killed the upcoming movie 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. Others observed that several movies streaming only on HBO Max, like The Witches and Locked Down, had been quietly removed from the streamer. Rumors abounded that all this foretold much weightier moves: that WBD was about to kill HBO Max; that it was shuttering other fan-favorite shows like Peacemaker; that significant layoffs were incoming.
But these worst-case scenarios failed to materialize at the company’s earnings call on Thursday. Instead, WBD announced the melding of HBO Max with another streaming platform, Discovery+, as well as several other key shifts. Here are the main takeaways from the call, and what they might mean for the future of a streaming industry that looks a lot shakier than it did a year ago.
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Your favorite HBO Max show isn’t getting axed—yet
This week, the upheaval at HBO Max produced a huge backlash from Hollywood creatives, who felt their work was being disrespected. 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 are safe for now.
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 Demimonde, whose budget was reportedly 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.”
This week, HBO Max announced that it would soon start streaming multiple shows from the TV empire of Chip and Joanna Gaines (Fixer Upper), who may lack critical accolades, but more than make up for it in broad appeal and viewership. 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 Dr. Pimple Popper: This Is Zit and Toddlers and Tiaras: Where Are They Now?) will be merged into a single, yet-unnamed streaming service.
In presenting the fusion, Wiedenfels talked about how the audiences of HBO Max and Discovery+ were so different that they were actually complementary. However, the language on the accompanying slide was accused of sexism on social media:
Love the idea that "Male Skew" is for big time serious big boy TV, and "Female Skew" is for small time little baby comfort TV. Love that these highly gendered, shitty, antiquated marketing strategies still exist. https://t.co/pmpz6QPOCS
— Nicole Rodriguez (@Shnikkles) August 4, 2022
You’ll be able to stream for free (with ads)
Wiedenfels said the merger between HBO Max and Discovery+ would first occur in the U.S. in the summer of 2023, with rollouts in other regions of the world to follow. He said that the new service would have three payment tiers: a free tier with ads; a discounted tier with minimal ads; and a premium tier with no ads. The announcement came on the heels of Netflix’s decision to add a lower-cost subscription with commercials.
Movie lovers will have to head back to theaters
When movie theaters shuttered due to the pandemic two years ago, many analysts predicted that a new era of streaming movies was imminent, in which viewers would grow accustomed to watching movies from their couches.
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 would not be a part of their strategy at all. “This idea of expensive films going to direct to streaming: we cannot find an economic case or value for it,” he said. (Netflix, meanwhile, just greenlit a sequel to its $200-million Gray Man action thriller.)
Wiedenfels added that the cancellation of projects that were already in production—like Batgirl, Scoob: Holiday Haunt, and The Wonder Twins—were “difficult decisions, but we are committed to being disciplined about a framework that guides our content investment for maximum return.”
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 even mentioned the upcoming and embattled 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.) When explaining the decision to ax Batgirl, Zaslav said: “We’re not going to release a movie unless we believe in it…Our job is to protect the DC brand.”
The big tent approach is winning
Should streaming services be specialized according to taste, or have something for everyone? Streaming companies have taken different strategies on this question: Disney+ has gone all-in on family-friendly programming (though its parent company captures different audiences with Hulu and ESPN+), while Netflix has tried to cast as wide a net as possible.
The merging of HBO Max and Discovery+, two specialty platforms, shows perhaps that the one-lane approach is not viable for major corporations. Despite a recent study showing that HBO Max has the highest level of satisfaction among customers, WBD decided that they could make more money by pairing it with Shark Week. 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.”