Aug. 30, 2023

How Did Warner Bros. Discovery Lose 1.8 Million Subscribers?

From the slew of layoffs, cancellation of shows, to their launching of streaming service Max earlier this year, Warner Bros. Discovery (WBD)’s strategic moves have been a subject of discussion since its formation through a merger last year. As latest reports of WBD losing 1.8 million subscribers pushes them into further scrutiny, we take a closer look at possible causes behind their falling numbers and strategic motivations. By: Theng Min Yee

Just within 3 months of Warner Bros. Discovery (WBD)’s launch of Max – its new streaming service that bundles HBO Max and Discovery+ content in a single destination – the conglomerate lost 1.8 million subscribers. According to the company’s earnings report, the losses were not derived solely from Max. The disclosed document reported that the company had 95.8 million global subscribers across all of its services – a decline from 97.6 million at the end of the first quarter of this year.

How Did This Happen?

The company’s chief financial officer Gunnar Wiedenfels characterised the downward trajectory as a seemingly temporary phase, where viewers were unsubscribing due to “overlapping subscriber bases between Max and Discovery+.” CEO David Zaslav echoed Wiedenfels’ sentiments, citing the potentially disruptive process of having HBO Max subscribers download the new Max app, in order to continue using the service. Zaslav also added that the company still expects its streaming business in the US to be profitable this year.

Though the toppers’ promising talk seems to bode true – with the company’s streaming revenue increasing to $2.73 billion this quarter – some of the platform’s viewers are speaking otherwise. Long-time users are showing displeasure regarding the removal of HBO classics from the new streaming platform, as well as the network’s raising rates. Fan favourites like South Side are made to close off their series with a final fourth season, whilst well-known titles like Westworld are gone from the new Max platform.

Underlying the Structural Shifts

WBD was formed last year, on April 8, 2022, from a merger between AT&T spun off WarnerMedia and Discovery. The $50 billion debt, inherited from AT&T and undertaken by WBD, has spurred hundreds of job cuts across the past months, in a bid to increase its savings and reduce its debt load. Iconic and upcoming series and films like Batgirl – which was nearly completed – were also shelved to cut costs. The company pulled shows like Westworld and The Time Traveller’s Wife, in order to add to the tax benefits to be gained by the company – a move equally in line with efforts to alleviate the burden of its debt.

Navigating Change

Falling in step with proactiveness in offsetting debts, a decisive commitment to change has infused the corporation, which also saw the much-established HBO seemingly departing from its past branding. This evolvement of the renowned brand into Max has garnered a varied response. Whilst some positive verdicts came from online reviews, which lauded the new app’s streaming quality and vast library of content, others called out the company’s seemingly ill-judged strategies.

In NPR podcast All Things Considered, TV critic Eric Deggans said, “In the past, HBO succeeded by becoming known as a great place for creators to work. And so now they're in a situation where they create a show and they don't know what's going to happen to it once it's been created and the episodes have kind of hit the public. And this move could also dilute the HBO brand.”

Apart from the removal of titles, the creation of Max has also seen HBO changing their longtime slogan of “It’s not TV, it’s HBO” to “It’s not TV, it’s — Oops! Something went wrong. Try restarting your HBO Max app”. The new slogan was a nod to HBO’s transition to Max, but this bizarre moment of HBO’s self-reflexiveness received mixed reactions. While some users liked that the platform was leaning into their concerns, the move was also an opening for ridicule. Famed British-American comedian John Oliver took swipes at Warner Bros. Discovery, saying: “I guess he is kind of right, there is entertainment in watching a company die. Incidentally, I believe that’s the new slogan for Max.”

Despite making losses and receiving some snipes for their strategic moves, WBD reported that it had paid down $9 billion in debt, including $1.6 billion this quarter. With major transitions underway, the conglomerate has monumental work to do on its path to recovery.

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