Warner Bros. Discovery (WBD) continues to lose subscribers whereas rising advert income.
Max, the corporate’s new streaming service (which mixes HBO Max and Discovery+ content material), dropped 700,000 world subscribers final quarter, decreasing its complete depend to 95.1 million.
The continuing Hollywood actors’ strike was behind “one of many lightest unique content material schedules in years,” CEO David Zaslav instructed traders throughout the firm’s earnings report on Wednesday.
Plus, the studio can also be dropping incremental income from subscribers who paid for each HBO Max and Discovery+ earlier than the 2 grew to become one.
However streaming promoting income, which is up 29% YOY, represents a glimmer of hope.
Sizzling on advertisements
WBD partly attributes its advert income improve to extra viewership for reside programming, which the former HBO Max didn’t have. Final quarter, WBD made a sports activities add-on tier for Max and launched a brand new app throughout the platform for reside information, referred to as CNN Max. (Hopefully it goes higher than CNN+.)
The studio determined to give attention to sports activities and information as a result of these classes appeal to new – and youthful – viewers who received’t pay for linear TV. Dwell content material ought to assist WBD improve engagement and decrease subscriber churn, which is presently “the most important challenge we face,” Zaslav mentioned.
Since including reside sports activities and information to Max within the fall, WBD is already seeing engagement (as in time spent) develop considerably, he added. And because of streaming advert development, common income per person (ARPU) is up 6% YOY to $7.82.
If WBD may develop advert income final quarter with “nearly no recent content material” on Max, then the corporate believes it’s positioned to capitalize on streaming much more when the actors’ strike resolves, mentioned CFO Gunnar Wiedenfels.
For now, Wiedenfels mentioned, Max is on monitor to changing into extra worthwhile.
Casting the web
In different excellent news for WBD, it paid off one other $2.4 billion in debt from Warner Media’s acquisition of Discovery final yr.
The extra debt WBD pays off, the extra the corporate can “allocate to different development alternatives,” Zaslav mentioned, notably “distributing our IP in ways in which maximize attain.”
WBD has licensed HBO content material to Netflix, Roku and Tubi this yr, for instance, and expanded its partnership with the European cable big Sky over the summer season to achieve worldwide markets. Subsequent yr, WBD intends to launch Max in Latin America in Q1, adopted by choose European markets all through the course of the yr.
Zaslav additionally teased the concept of pay TV bundles (as did Paramount in its earnings name final week).
There was “a variety of noise” across the latest carriage dispute between Disney and Constitution Spectrum, Zaslav mentioned, however the finish end result – Disney agreeing so as to add its streaming content material to Spectrum’s hottest cable package deal – is an settlement “structured in a manner that’s favorable for each events,” he mentioned.
That settlement will probably set a precedent for the way different programmers method carriage agreements.
For streamers, Zaslav mentioned, the good thing about the standard bundle is gaining extra subscribers from pay TV. And what WBD wants proper now’s subscribers.
