In the wake of its merger last year, Warner Bros. Discovery (WBD) made wide-scale plans to cut costs by at least 3 billion USD (which has now increased to 3.5 billion USD) and restructure its entire approach to buying and selling content in order to maximise revenue.
WBD has silently been removing a lot of original and acquired content from HBO Max, while also cancelling high-profile series such as ‘Minx’ and ‘Westworld’ in order to achieve their cost-cutting goals. These shows along with several other HBO and HBO Max titles will be moving to third-party FAST services, with WBD CEO David Zaslav recently confirming that they will be launching a free ad-supported streaming service in 2023, potentially acting as the new permanent home for some of these series.
Unlike the previous CEO, Jason Kilar, whose primary focus was on the growth of HBO Max, David Zaslav is instead prioritising a rapid generation of revenue from traditional methods such as television ad sales, sale of original content to third-party services and movie box office. This approach is the reasoning behind their massive scaling down of HBO Max.
One of the first signs of this scale-down appeared in India last year when a deal was struck between WBD and Amazon Prime that allowed the latter to gain exclusive first-window streaming rights to all HBO Max original titles. HBO Max originals in the region were previously not acquired by any service as Warner Media had plans to launch HBO Max in 2023 once their deal with Disney+ Hotstar (who had exclusive access to all HBO original titles such as Game of Thrones and Succession) ended, but WBD is now considering another deal with Amazon Prime that will give them exclusive access to HBO original titles, essentially replacing Disney+ Hotstar as the home of HBO originals in the region.
Taking a look at the top 10 services with 1st window premieres of Warner shows using 3Vision's Show Tracker, there is an even spread between third-party services such as Sky Atlantic and OCS and their own services such as HBO and HBO Max. Although Warner was looking to rapidly expand HBO Max into Europe, they had always maintained that their content pact with Sky would continue. While many of the top buyers of Warner series operate in a single market, Sky is even more lucrative as it is acquiring series for the UK, Germany and Italy. Foxtel (the owner of Fox Showcase and Binge) in Australia has also renewed a multi-year content deal with WBD that will make sure that they remain the home of all HBO, HBO Max, and other Warner content in the region.
The same can’t be said for OCS in France, the Pay channel that once operated as a joint venture between Orange and Canal+ until January this year when Canal+ acquired them fully. It is soon to be replaced as the home of HBO in France by the ‘Warner Pass’, a direct-to-consumer route exclusively functioning as an Amazon Channel, containing content from channels such as HBO, Warner TV, Eurosport, Discovery Channel, Cartoon Network, CNN and more. WBD has also announced that as a celebration of the launch, all episodes of ‘The Last of Us’ will exclusively stream on Amazon Prime (free for all subscribers) a day after its US premiere. The ‘Warner Pass’ will launch this month in France with more regions to be added in the coming months.
As mentioned previously, Disney+ Hotstar is also set to be replaced as the home of HBO in India as their content deal with WBD comes to an end in 2023 and they are not likely to pursue a renewal as their focus is shifting towards building their local language content catalogue.
Amazon will be an important partner for Warner going forward as the home of its ‘Warner Pass’. It has been a relatively active buyer of Warner series over the past few years, particularly in India, the market largely responsible for the biggest leap in acquisitions in 2022. WBD continue to enhance their relationship with Amazon, bringing back the HBO Max Prime channel in the US after it was shut down in 2021 when the two companies couldn’t come to an agreement.
Although HBO Max is being downsized and the new management is keen to increase revenue from other sources, WBD’s focus lies on launching its new streaming service which will have content from both Discovery+ and HBO Max. As drastic as it may seem to cancel original shows and movies from the service, upsetting a few fans in the process, or passing them on to other third-party services, these steps will go a long way in helping the new leadership achieve their cost-cutting goals and diversify the studio’s revenue which in turn can hopefully better support their streaming efforts in the years to come.