This is an egregious blunder for a group that includes the iconic HBO pay-TV brand and had already begun rolling out its own direct-to-consumer service HBO Max. The situation is particularly dire in the wider Asia region, which is currently the fastest-growing streaming market in the world, but where the new enhanced WBD iteration of HBO Max won’t be available for another two years. Courtesy of Warner Bros. Discovery “We intend to start it [HBO Max] service that will roll out in the US next summer. Latin America will follow later in the year, the European markets [currently] with HBO Max to follow in early ’24, with additional releases in key Asia Pacific and some new European markets later in 2024,” said JB Perrette, CEO and president of global streaming and gaming at Warner Bros. Discovery, in conference. call Thursday, following the release of the merged WBD’s second-quarter financial results. Admitting that the software HBO Max is built on isn’t up to par is sad. HBO Max has had “performance and customer issues,” but offers a rich feature set, Perette explained on the conference call. On the other hand, Discovery+ has more limited features but provides a more robust underlying delivery infrastructure. Pity consumers in eight markets in Asia where the HBO Go platform is currently available. They had been told that HBO Max would represent a technical upgrade to what they were currently selling. While the group’s technology issues will certainly be overcome, the lost time and exit from the market can be costly. There are at least two reasons for this. First, global SVOD growth is already slowing — some markets are already nearing saturation, while a looming recession will cause more consumers to reduce their discretionary spending and likely reduce the number of video subscribers per household. The rot has already begun in the UK, where a BARB survey published this week found a 2% quarter-on-quarter decline in the number of UK households with any SVOD service. In fact, WBD’s goals for the new service are curiously underwhelming. It aims for 130 million global subscribers by 2025, up from the group’s 92 million today. But that compares to 2022 figures of 220 million for Netflix. Disney+ with 138 million (excluding Hulu and ESPN+). and the 65 million that Paramount+ quickly built. Armed with Discovery+ technology, fresh insight into the balance between AVOD and SVOD, and a wealth of content (Discovery, HBO, Warner Bros. and a large bundle of TV brands spanning news, kids and entertainment), there’s every reason to believe that the WBD / HBO Max will be released floating. One advantage of being late to the party could be a shorter ramp to profitability than its first-mover rivals. “The launch of new paid and free streaming platforms in 2024 likely allows the company to drive immediate revenue generation through major licensing deals and some growth points in theatrical and branded subscription channels,” says Vivek Couto, at consultancy Media Partners Asia. “It also gives new management time to plan execution and strategy for technology, content and localization as well as pricing and understand what their right to play in the region is. The focus will always be on trying to achieve scale and generate revenue in key markets such as Australia, Japan, India and parts of Greater South East Asia.” HBO will continue to do well as a brand thanks to its “Game of Thrones” spinoffs, but not on HBO Max, Enders says. “It’s HBO that has the brand recognition, not HBO Max,” says Enders. He sees the best prospects for HBO Max in North and Latin America. Europe is different and a more established pay TV market thanks to 50% of the audience being over 42 years old. “They will keep open the possibility of launching in these other European markets. When they see that they’re building a big pay-TV audience for ‘House of Dragons,’ for example, and the other spinoffs, they’re going to see that that’s perpetuated value,” Enders says. However, a second reason for concern is that in the interim period before the new service is launched, WBD will actually help its competitors by offloading content. This is already underway. All eight “Harry Potter” films will leave HBO Max starting August 31 and can already be found in the US on Peacock. HBO Max has quietly removed six Warner Bros. streaming exclusives and dropped the ‘Batgirl’ movie in efforts to cut costs.
