Ever since last year’s merger of WarnerMedia and Discovery, we’ve been hearing that HBO Max and Discovery+ will combine into one mandatory bundle. Now, the combined company is backtracking.
Sources told Wall Street Journal that Discovery+ will remain available as a standalone streaming service after all, and Warner Bros. Discovery confirmed the news shortly after. While the full Discovery+ catalog will also stream through HBO Max—or whatever its name ends up being—cord-cutters won’t have to pay for that more expensive service just to watch Discovery’s brand of comfort-food TV.
That might be a logical decision for Warner Bros. Discovery, but it’s also great news for cord-cutting’s central tenets of choice and flexibility. Not every streaming service needs to be as big and expensive as Netflix, and the sooner media companies realize that, the better.
Not better together
When Warner Bros. Discovery first announced its plans to combine HBO Max and Discovery+, it talked up the business benefits of having one big streaming service that appealed to everyone. Gunnar Wiedenfels, who is now the combined company’s CFO, spoke of combining HBO Max’s “male-skewing” audience with the “female positioning on the Discovery side,” creating “one of the most complete … four quadrant, old-young-male-female products out there.”
The company has now realized that forcing all those quadrants together might not be great for business.
Discovery+ currently costs $5 per month with ads, or $7 per month without. Even at that fairly low price, it is already profitable with 20 million subscribers, the Journal reports.
By contrast, HBO Max costs $10 per month with ads or $16 per month without them—it raised the no-ads price by a buck a month last month. While subscriptions across HBO’s cable channel and HBO Max reached 76.8 million in mid-2022, the streaming side remains unprofitable, prompting some major cutbacks to the HBO Max catalog.
Like most other media companies, Warner is now focusing more on profitability than growth. It’s no surprise, then, that the company has lost its willingness to pull Discovery+ as a standalone offering. Faced with no option but to pay for HBO Max, a lot of those subscribers are likely to walk away and find other things to watch, taking Warner’s hard-fought progress toward profitability with them.
The a la carte lesson
The big takeaway here is that there’s still room for smaller, cheaper streaming services aimed at well-defined audiences, even as streaming services move in the opposite direction.
Amazon Prime and Apple TV+, for instance, have been pursuing more expensive sports rights while raising their prices. Paramount+ and Showtime are now merging into one service, which is likely to become more expensive. HBO Max still plans to offer a combined service with Discovery+, and the Journal reports that it plans to raise prices after doing so.
The market is unlikely to sustain all those options as they become bigger and more expensive. Cord-cutters are smarter than they get credit for and have realized they don’t need to pay for all these services, at least not all at once.
The way forward, then, may involve fewer services like Netflix and HBO Max, and more like Discovery+. With media companies warming to the idea of licensing content again, perhaps we’ll see a blossoming of niche services with dedicated audiences that can actually turn a profit.
The result won’t exactly be the a la carte TV you’ve always dreamed of, but it won’t be cable all over again, either.
Sign up for Jared’s Cord Cutter Weekly newsletter for more insight on where TV is headed.
