Last week, in a move that produced doubletakes among both streaming fans and Wall Street power players, AT&T announced it would spin off HBO, Time Warner and its other entertainment assets into a new company that will merge with Discovery, which owns Food Network, HGTV and more niche cable networks. The immediate assumption from most observers was that the company would combine its offerings into a single streaming service that could potentially rival the biggest players in the space. Well, we seemingly got confirmation of those plans from CEO David Zaslav, and now I’m really fired up.
The longtime Discovery CEO who will lead the new company said he fully expects the offering to compete with Netflix and Disney Plus and for the three to represent the upper echelon of the service providers in the streaming space. He also said he expects the company to be very competitive and have a strong footprint in global territories. Here’s a portion of the quote he gave during JP Morgan’s Global Technology, Media and Communications conference, courtesy of Next TV...
We think that we can be one of the three (with Netflix and Disney Plus). We think we can be competitive and differentiated at that level... (We want) a fully scaled global platform that people get up in the morning and they want to watch and it nourishes and delights them in a way that they feel like it's part of who they are. That’s what we do with Food [Network]. That's what we do with Discovery. That's what we do at [HGTV] That’s what [AT&T and WarnerMedia] do with with HBO and together. I think we’re going to make a good connection, but the bar is getting high.
Now, on first glance, there’s a lot of daylight between Netflix, Disney Plus and Discovery/ HBO Max. Netflix reportedly has 200M subscribers, Disney Plus reportedly has 100M subscribers, HBO Max reportedly has 45M subscribers and Discovery Plus reportedly has 15M subscribers. That’s a lot of ground to make up, but a lot of things can change very quickly when you’re talking about the entertainment industry, especially with more than a billion overall subscriptions floating around. On paper, HBO Max and Discovery should be able to offer an extremely compelling product that’s appealing to many consumers.
Exactly what that streaming service is going to look like is still unclear. Between HBO Max and Discovery, there is so much potentially on the table. From news with CNN to live sports with TNT to prestige programming with HBO to new release hit movies with Warner Bros to the quality niche programming that’s available from channels like TLC, Food Network, HGTV, Animal Planet, Travel Channel and more, it’s hard to think of people who wouldn’t be interested in something. Because of that, it’s ultimately going to come down to price and what’s actually made available on the service. If the answer is a lot for a price that’s competitive in the space, 75M to 100M users seems like a reasonable long-term stretch goal.
Right now all of this talk feels like distant speculation, especially since there are other players that may join forces, but at some point in the not so distant future, this is going to be a real streaming service that’s available on the market, and I can’t wait to see what it looks like. It has the potential to be the absolute best offering in the space or it has the potential to be a nice enough product that continues to compete on the second popularity tier of streaming services.