CEO of Warner Bros. Discovery David Zaslav has embraced the strategic misalignment of spending on streaming and maximizing box office and cable TV lifetime values at the same the Time Warner owned Warner Bros. has set a goal of gaining 130 million subscribers globally for its HBO Max and Discovery+ streaming service by 2025.
The most important decision for a big media CEO is how much to lean into the future.
CEO of Warner Bros. Worldwide Networks and President of US Sports Group David Zaslav is choosing limbo for his strategy.
Former WarnerMedia CEO Jason Kilar focused the company on HBO Max. Zaslav, on the other hand, wants to maintain the company’s theatrical and traditional pay-TV businesses for as long as possible.
On Thursday, Zaslav reconfirmed his idea that Warner Bros. Discovery will not see its way through the streaming wars as an attempt to collect the most subscribers. Netflix lost 60% of its value over the past year after the first quarter of its subscribers grew. Media and entertainment companies now have to rethink their streaming strategies.
The combined HBO Max-Discovery+ product, Warner Bros. Discovery formally announced, will launch in the U.S. by mid-2023, and a free, ad-supported version will be offered for it. By 2025, Netflix plans to have 130 million customers worldwide. That’s 40 million more customers than subscribe to HBO Max and Discovery+ today, but still far less than the 221 million subscribers who pay for Netflix.
When he reported their company’s second-quarter earnings on Thursday, Zaslav stated that he has faith in both movie theater releases and the future of traditional TV for it will provide them with a steady income for many years to come.
However, he’s also committed to spending “significantly more” on HBO Max and adding Discovery programming to the streaming service.
Dara realized during the pandemic that the best course of action was to put his entire slate of movies in theaters and simultaneously release them on HBO Max. That’s because it ended up being only a temporary move, but at the time Kilar thought it was just the first company to move in that direction.
History is already quite impressed with it, Kilar said in an April interview with Deadline. It was a success. We were the first to get in.
By contrast, Zaslav this week emphasised the importance of theatrical releases for big-budget films by pulling “Batgirl,” which Kilar had scheduled to appear on HBO Max directly. “It doesn’t make economic sense to launch expensive movies directly on streaming services,” Zaslav said. a $90 million film called “Batgirl” was made.
That leaves ‘expensive’ films like direct-to-streaming films. When it comes to how people are consuming them on the platform, how often people buy a service for them, how they get nourished over time, that comparison to the cost of how it’s experienced on the theaters just does not pan out, and so we are making a strategic shift, Zaslav said.
This is not Zaslav’s first reset during his tenure.
Kilar also presided over the launch of CNN+, a $300 million attempt to get CNN’s digital strategy going. Similarly, Zaslav came to the conclusion that he should get rid of the streaming service before it even had a chance to see if it was successful.
According to Zaslav, live news is better served by traditional pay-TV rather than streaming. This means CNN live will not be included in HBO Max/Discovery+ when it launches, or anytime soon.
“We see live news as critical to the linear pay-TV service,” Zaslav said.
It’s a juggling act to promote HBO Max while also trying to slow box office decline and linear pay-TV decline. But it’s also part of the plight of the modern media CEO. The tendency to look too far into the future cannibalizes cash-flow positive businesses.
Perhaps it is not an intellectually elegant move. But it is the card Zaslav has chosen to play.
“I’ve been around a long time,” Zaslav said, adding that he “hung out” with Jack Welch when he ran NBCUniversal, where Zaslav worked. Originally, people thought of TV broadcasting as a dead medium in the ’90s. Yet due to the sheer volume of viewers and ability to market product, it wasn’t too difficult to keep broadcasting alive. We are huge believers in the power of reaching a wide audience, and this is how we think broadcasting will stay afloat.