Warner Bros. Discovery CFO calls company’s HBO Max and Discovery+ ‘underpriced,’ suggesting price hikes may be coming

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  • CFO Warner Bros. Discovery Gunnar Wiedenfels stated during the Goldman Sachs Communacopia Tech conference that his company’s streaming services were “understated”.
  • Wiedenfels declined to say how his company would price the HBO Max-Discovery+ combo service.
  • Last month, Disney announced a dramatic price increase for its streaming services.
  • HBO Max ad-free currently costs $14.99 per month; Discovery+ ad-free costs $6.99 per month.

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Streaming service subscriber growth may slow downbut that doesn’t mean prices won’t continue to rise.

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HBO Max and Discovery+, Warner Bros.’s two flagship streaming services. Discovery are “fundamentally undervalued,” CFO Gunnar Wiedenfels said at the Goldman Sachs Communacopia Tech conference on Tuesday.

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Wiedenfels suggested that the company has enough room to raise prices given the power of content in services that will be merged into one next year. Last month, Warner Bros. Discovery said it plans to launch the combined HBO Max-Discovery+ service in the US in mid-2023, with international markets to follow.

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Although Warner Bros. While Discovery has not announced how the combined service will be priced, Wiedenfels’ comments suggest the company may use the merger as a chance to raise prices. HBO Max is currently $14.99 per month without ads and $9.99 per month with ads. Discovery+ costs $6.99 per month without ads and $4.99 per month with ads.

Wiedenfels noted HBO Max has won more Emmys (38) this week than any other streaming service. HBO’s White Lotus won the most awards during the primetime ceremony with five, including Outstanding Limited Series. According to Wiedenfels, Warner Bros. Discovery is to combine HBO’s award-winning programming with Discovery’s lighter reality content, which should reduce “churn” or the number of subscribers who opt out of the service.

Rising prices galore

Netflix is ​​currently the most expensive major streaming service, with a standard plan price of $15.49 per month. Last month, Disney announced price increases for Disney+, ESPN+, and Hulu, including an increase in the price of Disney+ ad-free from $7.99 to $10.99 per month.

Last month, Warner Bros. Discovery has set new streaming subscriber targets, including 130 million global subscribers by 2025. The company also reaffirmed its expectations that its streaming business will break even by 2024 and generate $1 billion in profit by the end of 2025.

According to Wiedenfels, Warner Bros. Discovery isn’t chasing subscriber growth at any cost. The change — prioritizing profitability over growth — gives the company more “price power” over the streaming business, he says.

“We don’t optimize for subscribers,” said Wiedenfels, who called this type of strategy “old-world streaming.”

— Sarah Witten of CNBC

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