Warner Bros. Discovery (WBD) unveiled key details about its upcoming streaming launch, which will include content from both HBO Max and Discovery+ as CEO David Zaslav looks to leverage the company's wide portfolio of assets to boost subscriptions.
During a press event on Wednesday, the media giant officially revealed the name of the new service as "Max," with the tagline "Max — the one to watch." It will launch May 23 with three different tiers: $9.99/month for the ad-supported version, $15.99/month for the ad-free option, and a new "ultimate" ad-free tier for $19.99/month that allows four concurrent streams and 4K streaming options, according to the website.
With the exception of the new "ultimate" tier, those prices match up with current HBO Max pricing. Earlier this year, the company increased the cost of its ad-free plan from $14.99 a month to $15.99 in the U.S.
Warner Bros. Discovery's streaming strategy will be paramount for the company, which has battled a slew of merger-induced challenges since the combination of WarnerMedia and Discovery in April of last year. The streaming business is a crowded field, with competitors like Disney (DIS), Netflix (NFLX) and Apple (AAPL) all vying for subscribers.
"Max is the one to watch [because] it's the place every member of the household can go to see whatever they want at any given time," Zaslav said, touting the company's strong storytelling IP from franchises like "Lord of the Rings" and "Harry Potter" to successful shows like "Friends" and "The Big Bang Theory."
The platform will balance Discovery's global and nonfiction content with HBO's higher quality scripted programming, with new "Max" titles currently in the works including a live-action "Harry Potter" TV series and a "Game of Thrones" prequel. As the company previously confirmed, Discovery+ will keep running as a standalone streaming service alongside the soon-to-launch Max service.
Zaslav teased an "attack plan" when it comes to incorporating live sports and live news within the streaming business, although no details were provided at Wednesday's event.
"We want to share these stories with the broadest audience possible," Zaslav said, noting how HBO's scripted content lures in subscribers while Discovery's unscripted programming retains them.
"Holding subs is as important as adding subs and together they pack a really powerful 1-2 punch," he said.
The company also revealed improved product features like new discover hubs in an effort to increase engagement.
Shares of Warner Bros. Discovery remained under pressure throughout the presentation, with the stock down about 3% Wednesday afternoon.
Within its streaming division, WBD reported a direct-to-consumer loss of $217 million in the fourth quarter — a $511 million improvement over last year. The company estimated its streaming division will break even by next year before hitting profitability in two years as CEO David Zaslav told investors during the company's Q4 earnings call, "The bulk of our restructuring is behind us. ...We are one company now."
Warner Bros. Discovery currently boasts 96.1 million subscribers, but reiterated its goal to hit 130 million paying users by 2025. For context, Netflix maintains 231 million subscribers — slightly below Disney's 235 million count across Disney+, ESPN+ and Hulu.
"We think DTC/HBO is currently undervalued vs peers given the near-term break-even and future profit ramp," Wells Fargo analyst Steve Cahall wrote in a note last month after upgrading the stock to Overweight from Equal Weight.
The analyst, similar to others on Wall Street, noted further upside as the company continues to execute on cost-cutting and deleveraging its balance sheet. Still, Warner Bros. Discovery faces big risks amid escalating competition, falling linear network revenue, and looming recession fears.
The embattled media giant is now targeting $4 billion in cost saving synergies over the next two years, up from the previously announced $3.5 billion. The company reported a net loss of $2.1 billion in the three months ending December 31.