Warner Bros. Discovery CFO Gunnar Wiedenfels Justifies Increases Of Max Subscription Prices
Warner Bros. Discovery became notorious for its cutting spree ever since David Zaslav took over. For the past two years, several projects have been axed with the aim to save some money. Batgirl is the most prominent example, but it is the just one on a list of movies that were canceled during production as a tax write-off.
WBD’s savings may have been offset by the hundreds of millions their DC releases, especially The Flash, lost at theaters, but they were boosted by the success of Barbie. They also saved a reported $100 million thanks to the halt in work and promotion brought on by the writer and actor strikes that were recently resolved.
Zaslav seemingly has the cash flowing, at least into their coffers, or monitored again as he promised. As a result, the company appears to be doubling down on its resolve to grow those coffers and make money. Their next plan of attack to that end might be to hit their customers in the wallet some more.
You don’t have to take our word for it. WBD CFO Gunnar Wiedenfels indicated as much at this year’s Bank of America Securities Media, Communications & Entertainment Conference when he offered a justification for rising streaming subscription prices. “For a decade, in streaming, an enormously valuable amount of quality content has been given away well below fair market value,” he said via The Hollywood Reporter.
“That’s in the process of being corrected,” he continued, alluding to price hikes. “We’ve seen price increases across essentially the entire competitive set. We’ve increased prices, especially internationally, where a lot of the HBO Max launches were very, very much targeted at the maximum possible subscriber number, not necessarily the maximum possible economics from the launch.”
HBO Max — at the time new to the scene, finding its identity, and backed into a corner by the realities of pandemic lockdowns — was also on the eve of giving away blockbuster movies for peanuts. A risky and polarizing move, it raised the service’s profile until the merger between WB and Discovery closed and the HBO portion of the brand name was dropped.
Now many of the selections from 2021 — including Westworld and Godzilla vs. Kong — that propped it up are available for free on Tubi. Westworld is one of Max’s canceled shows, by the way, and knowing all of this, the question of what Max realistically will have to offer is begged. And a serious concern magnifies this quandary.
As Wiedenfels notes, “A small percentage of titles really drives the vast majority of viewership and engagement.” But if the selection is smaller, and the strategy narrowed, what then is the plan to drive viewership? Zaslav’s proclamation to drive the heck out of DC and franchise IPs comes in at this stage. Maybe there will be less content but it will be tentpole.
It will also be made across a spectrum reportedly and not by “one individual unit.” Thus, DC has become a semi-autonomous studio with facilities all its own being set aside in Leavesden, England, as of a few weeks ago. Company-wide, they are “bringing together” their “back office processes, our post-production processes, content management systems,” and so on.
Wiedenfels predicts, “…there is going to be very significant efficiency potential in it on the content side…without any impact on the quality of the creative and the opportunity on the creative side.” Likewise, he sees optimal potential in monetizing content through licensing to other streaming services, and a Barbie theme park. It was a hit so there are some bragging rights.
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