WBD Seeking More Max Bundling, Telco Partnering Opportunities

Expect more Max bundling with other streaming services and partnering with telcos around the world, Warner Bros. Discovery executives said Thursday as the company announced Q1 2024 results. WBD and Disney this week unveiled a Disney+/Max/Hulu streaming bundle that will launch this summer.

The Disney bundle follows Verizon's Max/Netflix bundle, which is performing better than expected, WBD CEO David Zaslav said in a call with analysts. While companies from Amazon and Apple to Roku are aggregating streaming services, "it's much more efficient, ... and a much better business if we can do it ourselves," Zaslav said. WBD CEO-Global Streaming and Games JB Perrette said that as Max rolls out this year in markets like France, it will partner with telco operators Canal+ and Orange and explore alliances with other streamers and programmers. Zaslav said Max has rolled out in 39 countries outside the U.S. so far this year, including Latin America, and is adding 25 additional markets across Europe in the coming weeks.

The streaming industry "went down a very dangerous financial path" in recent years by "trying to invest in every type of content in every genre to try and be something for everyone," Perrette said. Now there's a greater focus on "swim[ming] in the lanes that we were great at," with Disney being particularly strong in kids and family programming and WBD in drama, comedy and nonfiction, he added.

"Re-bundling of traditional media content on streaming platforms [is] key to making the space investable again," T.D. Cowen's Doug Creutz wrote to investors this week. He said Disney and WBD lead streaming in content quality and their libraries, and the bundle will likely be attractive to subscribers. In addition, going direct-to-consumer solo "requires significant consumer acquisition spending," while bundling -- especially with another party serving as the distributor -- allows content producers to "take more risks with content that may have narrower but deeper audience appeal." Stand-alone over-the-top offerings are "just fundamentally the wrong business model for TV."

Revenue for Q1 was $10 billion, down 7% year over year. It said it had 99.6 million streaming subs worldwide, up from 98.5 million a year ago. Networks advertising, at $2 billion, was down 11% year over year due to general declines in domestic entertainment and news networks and the soft linear ad market in the U.S. and Latin America, it said. Streaming ads, at $175 million, rose 70% year over year. Chief Financial Officer Gunnar Wiedenfels said streaming and linear ads are in "a very, very long period of coexistence" rather than all ad spending jumping from linear to streaming. But streaming ad spending is accelerating significantly, he said.