Warner Bros. Discovery CEO David Zaslav warned Thursday that consolidation in streaming is coming — but rather than mergers and acquisitions, he sees it as aggregation.
“One of the challenges in business right now is the difficulty in aggregating content that they love for the consumer, entertainment, non-fiction, content, sports content. Everyone is googling where is it? How do I get that?” Zaslav said during MoffettNathanson’s inaugural Technology, Media & Telecom conference. “It’s not rational and it’s not really sustainable because it’s not a good consumer experience, not sustainable because there’s a lot of business in this business. There are people all over who are losing a lot of money.”
While he acknowledged that consolidation through M&A is “one answer”, he added that it is “not easy” from a regulatory perspective.
“Takes time. This industry is changing so fast. Saying I’m going to take two years and then I’m going to emerge with a new set of assets for another 2.5 years, who knows what the world looks like , “So I think there’s a lot of risk from a regulator or a [perspective], But there must be a consolidation. And I think the repackaging and marketing of the products are more likely to happen together. I think that really makes sense. We have to reach that point as an industry.”
He argued that the current overall value of streamers has become “irrational” compared to cable.
“The streaming services doubled or tripled what they were offering, and then they brought the price down. People are paying much less for content now than ever before. If there were 50 million people who preferred premium over basic cable five years ago, they’re paying a lot more money for these streaming services than HBO, Showtime, Starz, Epix, Encore, and the investment in content is three or four times that. , ” Zaslav said. “It will all work but the key for us is how do we create a product that people love and how do we make more people feel nurtured and loved by that product? I think that’s really something that we have and once you have the ability to raise the price or provide games and other products, they either spend more money or whatever their experience on the platform further enrich. He is a winner.
His comments come as WBD prepares to launch its Max rebrand on May 23, which will combine HBO Max and Warner Bros. Discovery’s libraries and feature HBO, DC Universe and “Harry Potter” content. The combined service will offer three pricing tiers: Max Ad Lite at $9.99 per month, Max Ad-Free at $15.99 per month and Max Ultimate Ad-Free at $19.99 per month.
Zaslav expressed a willingness to bundle with other streamers in the future if it meant a better consumer experience.
“To me, it seems very clear that if we package this great product that we have with others, if we wake up tomorrow and in every market if we are the No. 1, 2 or 3 product, if we or marketed with three [streamers] For a specific price, it would be great for consumers and probably reduce churn, we would both market a product and have it deliver a meaningful consumer experience. “Not just on price, but on ‘OK, now I have a great package of content, which is comprehensive’,” he said.
He warned that if the content owners themselves don’t do it, other platforms like Roku and tech companies like Amazon and Apple will.
“Whether we do it this year or in three years, I think eventually something like this will happen. If we don’t do it for ourselves, I think it will be done to us,” he said. “It will be Amazon that does it, it will be Apple that does it, it will be Roku that does it. They’re starting to do it. And it makes sense. A lot of people will go to some of those platforms that They will be in the form of easy curation to like.
