The ‘House of the Dragon’ series logo displayed on a phone screen and the HBO Max website can be seen in this illustration photo, taken on August 16, 2022.
Jakub Porzycki | Nurfoto | Getty Images
Streaming subscriber growth is slowing, but that doesn’t mean prices won’t keep rising.
HBO Max and Discovery+, the two flagship streaming services from Warner Bros. Discovery, are “fundamentally underpriced,” Chief Financial Officer Gunnar Wiedenfels said Tuesday at the Goldman Sachs Communacopia Tech Conference.
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Wiedenfels suggested the company had plenty of room to raise prices given the strong content of the services, which will be merged into one next year. Last month, Warner Bros. Discovery that it planned to launch a combined HBO Max-Discovery+ service in the US in mid-2023, with international markets to follow.
Although Warner Bros. Discovery has not announced how it will price a combined service, Wiedenfels’ comments suggest the company could use the merger as an opportunity to raise prices. HBO Max currently costs $14.99 per month with no ads and $9.99 per month with commercials. Discovery+ costs $6.99 per month with no ads and $4.99 per month with commercials.
Wiedenfels noted that HBO Max won more Emmys (38) this week than any other streaming service. HBO’s “The White Lotus” took home the most awards at the prime-time ceremony with five, including Outstanding Limited Series. The strategy of Warner Bros. Discovery is to combine HBO’s award-winning programming with Discovery’s lighter reality content, which should reduce “turnover,” or the number of subscribers who cancel the service, Wiedenfels said.
Price increases galore
Netflix is currently the most expensive major streaming service with a standard subscription price of $15.49 per month. Disney announced price increases for Disney+, ESPN+ and Hulu last month, including increasing the price of Disney+ without ads from $7.99 per month to $10.99 per month.
Warner Bros. Discovery set new goals for streaming subscribers last month, including 130 million global subscribers by 2025. The company also confirmed its expectation that its streaming business will break even by 2024 and reach $1 billion in profits by the end of 2025.
Warner Bros. Discovery isn’t chasing subscriber numbers at all costs, Wiedenfels said. That change — to prioritize profitability over growth — gives the company more “price power” over its streaming business, he said.
“We don’t optimize for subscribers,” said Wiedenfels, who called that kind of strategy “old world streaming” thinking.
— Sarah Whitten of TBEN contributed to this report.
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