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© Reuters. The exterior of the Warner Bros Discovery Atlanta campus is pictured after the Writers Guild of America began their strike against the Alliance of Motion Pictures and Television Producers, in Atlanta, Georgia, U.S. May 2, 2023. REUTERS/Alyssa Pointer/Fi
By Helen Coster and Dawn Chmielewski
NEW YORK (Reuters) - When the HBO Max streaming service relaunches on Tuesday as “Max,” Warner Bros Discovery (NASDAQ:WBD) Inc will learn whether mixing critically acclaimed dramas with reality fare that some might describe as a "guilty pleasure" will attract more subscribers.
“Max” will bring together HBO’s high-end scripted programming like “Succession” and Warner Bros films with Discovery’s food, home and lifestyle content, including "Fixer Upper: Welcome Home,” in a bid to broaden the appeal of the original HBO Max service, as well as reduce the number of people canceling the service each month. It also plans to expand the portfolio of children's content.
Warner Bros Discovery first announced the planned changes on April 12.
The media company forged by the 2022 union of WarnerMedia and Discovery is betting that the addition of Discovery content will help retain viewers who typically sign up for HBO Max to watch a season of their favorite show – and then cancel after the finale.
It is a formula that proved successful for the Discovery+ service in Poland and the Nordic countries.
“In markets where we had scripted entertainment and nonfiction sitting together, we know the proposition works,” said JB Perrette, Warner Bros Discovery’s president and chief executive of global streaming, adding that despite the common perception of HBO viewers “as only living in an ivory tower of HBO, the reality is we all have guilty pleasures.”
Max also will seek to mine the media company's rich trove of entertainment franchises, with a forthcoming “Harry Potter” series, a “Game of Thrones” prequel and the DC Comics-inspired “The Penguin,” starring Colin Farrell. Perrette said the company also is thinking about how to incorporate sports in its streaming offering.
In its first-quarter results announced earlier this month, Warner Bros Discovery said its streaming unit, which includes the HBO Max and Discovery+ services, posted adjusted pretax earnings of $50 million, compared with a loss of $227 million a year earlier. It gained 1.6 million subscribers.
"Our U.S. streaming business is no longer a bleeder," CEO David Zaslav said on a post-earnings call.
That marked a milestone for a division that had been losing money in its bid to gain subscribers and a foothold in the industry's digital future. However, Zaslav said the churn on HBO Max was unacceptably high. Some 6.5% of HBO Max subscribers canceled the service in April, double the churn rate of rival Netflix Inc (NASDAQ:NFLX), according to the analytics firm Antenna.
Discovery+ will remain a standalone platform, though its most popular shows will also be available on Max.
Max has three tiers: an ad-supported version for $10 per month and ad-free version for $16 per month, both with the ability to stream on two devices at once; and a $20-per-month ad-free version that can be streamed on four devices at once.
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