HBO Max and Discovery+ merge to become Max, transforming the streaming and advertising landscape

The news: HBO Max and Discovery+ will become Max on May 23, Warner Bros. Discovery announced Wednesday.

• The rebrand aims to protect HBO's premium image while incorporating lower-cost content from Discovery, which could bring new opportunities for advertisers.
• The streaming service will offer several price tiers: $10/month with ads and $16/month ad-free. Both tiers will feature two HD concurrent streams, with the $16 plan also offering 30 downloads. A $20/month Ultimate plan includes 4K HDR, Dolby Atmos, four concurrent streams, and 100 downloads.
• Discovery+ will be available as a standalone service in the US, as we’ve previously covered.

WBD's streaming division aims to break even by next year and become profitable in two years, indicating potential growth and stability for advertisers to invest in the platform.

By the numbers: The comprehensive streamer will offer a wide range of content in a bid to grow its subscriber base to 130 million by 2025.

• Our February forecast projects HBO Max would have amassed 89.7 million US subscribers this year—yes, we took the pending merger of the services into account—so hitting that goal is aggressive.
• That 2023 figure is only 6.8% higher than 2022; for comparison purposes, Hulu’s growth was only slightly lower despite being 12 years older.

Advertisers may benefit: Combining HBO Max and Discovery+ catalogs will produce a service with diverse content offerings, catering to various audience segments and providing advertisers with more targeting possibilities.

• The unique content blend may encourage advertisers to explore new creative approaches or partnerships, capitalizing on the platform's extensive library and broad audience base.
• The merger will undoubtedly drive increased industry competition, as the combined service could challenge established players like Netflix, Disney+, and Amazon’s Prime Video, creating opportunities and potential hurdles for advertisers.

Our take: The success of the new service may depend on its pricing strategy, content offerings, and user experience, which could affect its potential value for advertisers.

• As the streaming market becomes more saturated, the introduction of Max may require media planners to reassess their advertising allocations across various platforms.
• Cord-cutters are trying to get away from bundling; that is, paying more for programming they don’t care for. In many ways, WBD is trying to do just that: (eventually) charging users more for a secondary library of content they may not consume—while simultaneously taking some content off the platform and licensing it to the likes of Roku and Tubi.
• At launch, JB Perrette, president and CEO of global streaming and games at WBD, highlighted the current “peak confusion” era in streaming. WBD is pitching Max as a comprehensive platform, eliminating the need for multiple services by providing everything users want. But will users buy the pitch?
• Selling HBO Max and Discovery+ users on the merged service will require marketing savvy—and when that initial price bump hits (on top of a January increase), look for potential signs of churn.