The “House of the Dragon” series logo displayed on a phone screen and the HBO Max website are seen in this illustration photo taken August 16, 2022.
Jakub Porzycki | Nurphoto | Getty Images
Growth of streaming service subscribers can slow downbut that does not mean that prices will not continue to rise.
HBO Max and Discovery+, Discovery of Warner Bros.Goldman Sachs’ two flagship streaming services are “fundamentally undervalued,” chief financial officer Gunnar Wiedenfels said at the Goldman Sachs Communacopia Tech conference on Tuesday.
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Wiedenfels suggested the company has enough headroom to raise prices given the content strength of the services, which will be merged into one next year. Last month, Warner Bros. Discovery has announced plans to launch a combined HBO Max-Discovery+ service in the US in mid-2023, with international markets to follow.
Although Warner Bros. Discovery hasn’t announced pricing for a combined service, Wiedenfels’ comments suggest the company could use the merger as a chance to raise prices. HBO Max currently costs $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 “The White Lotus” won the most awards at the primetime ceremony with five, including an exceptional limited series. The strategy of Warner Bros. Discovery is all about combining HBO’s award-winning programming with Discovery’s lighter reality content, which should reduce “churn,” or the number of subscribers who cancel the service, Wiedenfels said.
netflix is currently the most expensive major streaming service with a standard plan price of $15.49 per month. disney announcement price increases for Disney+, ESPN+ and Hulu last month, including raising the price of ad-free Disney+ from $7.99 per month to $10.99 per month.
Warner Bros. Discovery set new streaming subscriber targets last month, including 130 million subscribers worldwide by 2025. The company also reaffirmed that it expects its streaming business to hit the threshold. profitability by 2024 and generating $1 billion in profits by the end of 2025.
Warner Bros. Discovery isn’t pursuing subscriber growth at any cost, Wiedenfels said. This shift — prioritizing profitability over growth — allows the company more “pricing power” over its streaming business, he said.
“We don’t optimize for subscribers,” said Wiedenfels, who called this type of strategy “old-world streaming.”
— CNBC’s Sarah Whitten contributed to this report.
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