Warner Bros. CEO David Zaslav thinks consolidation is in the cards for streaming platforms, but not necessarily through traditional M&A. “There should be a consolidation, but it is more likely to happen in the repackaging and marketing of products together. That’s what I think makes sense. We have to, as industry, reach that point,” he said during a Q&A at a media conference today.
Mergers carry regulatory risks and can take years to close. In a fast-changing industry, “Who knows what the world looks like?”
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His comments at the MoffettNathanson event come as WBD prepares to launch Max next week, a combo of HBO Max – that name will disappear — and Discovery+ content. Disney last week announced plans to combine Disney+ and Hulu in one app. Executives fighting to attract new subscribers and reduce churn all agree that bundling really helps. Yet overall the streaming environment remains fragmented for viewers.
“It seems very clear that if we were to package this great product that we have with others, we would wake up tomorrow, and in each market, if we are the number one, or two, or three product, if we were marketing with the number two or three for a specific price it would be great for consumers. It would probably reduce churn. We would [all] be marketing one product. And it would provide a meaningful consumer experience.”
He sees that happening in one of two ways. “We could do it — the content owners in markets or, more broadly, across regions, could do it. Whether we do it this year or in three years. I think something like this will eventually happen.
“If we don’t do it to ourselves, I think it will be done to us. It will be Amazon who does it, or Apple who does it, or Roku who does it. They’ve already started,” he said.
Of course, a great bundling of streaming services would face some thorny questions. If the streaming bundle replicates the pay-TV one, wouldn’t the result be yet more fights over carriage fees and resulting blackouts hitting consumers? Would the new package need to be structured as a joint venture and, if so, how would it surmount the challenges that doom most JVs? In addition to money, there’s the issue of data. Having spent years and spent billions to try to tap into their consumers in a way the traditional pay-TV ecosystem has allowed, how will companies retain those insights?
Media companies are looking to trim content spend, or reallocate it, and turn streaming red ink into profits, all on a slightly different timetable. Most have said 2023 reps the year of peak losses. For WBD, streaming was already a bright spot in the first quarter, with a positive $50 million in ebidta (earnings before interest, taxes, depreciation and amortization). Zaslav called it a “meaningful turn” and said streaming would be profitable for full-year 2023, a year earlier than anticipated.
Dade Hayes contributed to this story
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