Warner Bros. Discovery (WBD) has adjusted its streaming plans, according to people familiar with the strategy. While the company still intends to create a new streaming service to feature both HBO Max and Discovery+ content, Discovery+ will remain available as a standalone SVOD service.
The sources suggested WBD wanted to avoid losing Discovery+ customers who would cancel their subscriptions if faced with higher prices on a combined SVOD offering. Executives previously said the new service will become more expensive than HBO Max, which has already upped the price of its ad-free tier this year, as advertiser pullback puts further strain on the company’s finances.
WBD is additionally planning to launch a free ad-supported streaming service this year in efforts to reach a broader audience, featuring FAST channels populated by Warner Bros. studio content, as well as titles that originally ran on HBO and Discovery outlets.
The initial idea was to fully fold Discovery+ into the new SVOD service, as part of plans to recuperate $3.5 billion in costs incurred in the merger between Discovery and WarnerMedia. By consolidating WBD’s brands (including CNN, Cartoon Network and TLC), the move was intended to streamline the company’s offering amid heightened competition and fragmentation in the streaming market.
The plan also entailed renewed emphasis on Discovery content, which represents a greater return on investment than HBO Max titles. The cost-saving measure of removing programming from HBO Max has been considered controversial, with commentators criticising WBD for treating content as collateral.
The updated strategy could assuage fears over consumers not seeing the appeal of a single service that housed such disparate content, from Discovery’s reality brands to Game of Thrones-type HBO programming. WBD hopes to avoid churn by enabling cheaper access to one without the other.