WarnerMedia and Discovery are on the cusp of officially closing their deal. With the change in leadership at the new Warner Bros. Discovery, will there be pricing changes for the new conglomerate&#…
The question is: Will the forthcoming merged streaming service from WBD, whenever that may arrive, simply be the sum total of the monthly prices of HBO Max and Discovery Plus? At the conference, Wiedenfels didn’t talk about potential pricing. But there’s precedent for actuallyDisney, for example, sells the “Disney Bundle” of Disney Plus, Hulu and ESPN Plus for $13.99/month with or $19.99/month — a 36% or 29% discount, respectively, compared with purchasing the trio separately.
Companies offer discounted bundles because, in industry lingo, they’re “stickier”; i.e., customers are less likely to cancel if they take more than one service from a provider. The net effect is to increase average revenue per customer, while the fixed cost of supporting an individual subscriber/account remains about the same., 46% of U.S.
Here’s what could happen going forward at Warner Bros. Discovery: The company might raise prices on the individual services for those who choose to keep them as standalones, but offer a relative price break on a combined service — which would be a carrot for subscribers to spend more to get the bigger package. Conversely, WBD could price HBO Max-plus-Discovery Plus lower than the sum of the separately sold parts while keeping the individual services’ pricing unchanged.
What the company will want to avoid is making existing customers feel like they’re getting force-fed something they don’t want for a higher price, because that would trigger a big wave of cancellations. Ultimately, WBD wants to take the HBO/HBO Max base of 73.8 million subscribers and Discovery’s 22 million and turn them into something more valuable together.
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