If imitation is the most sincere form of flattery, Warner Bros. Discovery CEO David Zaslav’s competitors are offering him high praise.

Disney, Paramount, and NBCUniversal have all begun to copy Zaslav’s once-controversial content optimization strategy of backtracking on several early-streaming era moves, such as removing underperforming series from flagship SVODs, and relicensing in-house content. Call it First Reverse-Mover Advantage.

Most importantly, Wall Street is rewarding The Zaz. Warner Bros. Discovery stock is growing at a faster pace than its rivals this year, following a brutal 2022. 

Jan 1-Feb 22, 2023 stock price changes for major media corporations:

• Warner Bros. Discovery: +61.6%
• Paramount Global: +36.5%
• Disney: +14.3%
• Netflix: +13.5%
• Comcast: +6.86%

With 18.0% Corporate Demand Share, Warner Bros. Discovery is in the top tier — along with Disney (20.2%) — in its ability to both build out a general entertainment streaming service, and increase its revenue by licensing highly in-demand content to competitors. 

Among the most anticipated announcements in today’s earnings call will be any specifics regarding a combination of HBO Max and Discovery+. HBO Max Originals were recently rebranded Max Originals within the platform.

The two platforms’ audiences have very little overlap, but combining Discovery+’s total catalog with HBO Max’s will create a service with the most in-demand total catalog with US audiences, higher than even Netflix.

Warner Bros. Discovery’s FAST strategy will both increase revenue and give old HBO Max series a chance to find new life. On top of announced deals with Tubi and Roku, look for the company to provide more details of its in-house FAST offering.

HBO Sunday Night: The Last of the Timeslots

Warner Bros. Discovery’s crown jewel is of course HBO. Despite all of the fundamental changes in the media industry over the last half decade, HBO’s 9pm Sunday night hour remains the last bastion of appointment scripted TV. 

House of the Dragon’s first season ended in Q4 2022, earning 92.5x more audience demand than the average show worldwide for the quarter. It was also the number one show worldwide for much of its first season run. 

Next up, global audience demand for The White Lotus skyrocketed for its second season. Demand for the show averaged 37.9x globally during its second season run, more than doubling its season one performance (18.02x). During Q4 2022 The White Lotus ranked in our Exceptional demand bucket, meaning it was among the top 0.2% of all shows across all platforms during that time.

The latest entry in this revered timeslot — video game adaptation The Last of Us — has been a massive hit. Since debuting, the show has an average global audience demand of 76.1x, peaking as high as 134.0x. The Last of Us has been the number one show worldwide across all platforms every day between February 7 and February 19, our last day of available data.

With Succession season 4 coming at the end of March, HBO’s momentum is strong throughout the first half of 2023.

Corporate Demand Share: US, 2022

• Corporate demand share assesses the long-term prospects of media companies as they look to consolidate their original content’s availability exclusively onto their own platforms.
• However, with Wall Street’s mandate to focus back on profits, this view of the entertainment landscape can also be used to assess which companies have the most valuable content to license out, rebooting one of the original revenue streams in the TV business. It can effectively help value a conglomerate’s legacy and library content in aggregate.
• Disney (20.2%) and Warner Bros. Discovery (18.0%) are in a class of their own when it comes to corporate demand share. While Netflix is still the leader in many streaming-only metrics, Disney and Warner Bros. Discovery have the overall catalog content to both build out general entertainment streaming services, and to significantly boost licensing revenue by selling to competitors.
• With FASTs becoming an increasingly important part of the streaming ecosystem, Warner Bros. Discovery is poised to benefit from the demand for its catalog. It has already announced FAST channel deals with Roku and Tubi and is planning an in-house FAST channel. 

Total Catalog Demand Share (TV & Movies Combined): US, 2022

• Demand for original content drives subscription growth, but library content is key for customer retention. Total catalog demand share — demand for all movies and TV shows available on a service, both exclusive and non-exclusive — is a good indicator of which SVODs consumers are most likely to use as a default ‘streaming home.’
• This broader look at the streaming landscape reveals a clear Big Three when it comes to general entertainment services with US audiences, with Netflix (17.7%) in the lead, followed by Hulu (15.5%) and HBO Max (15.2%).
• This chart shows the benefit of the future consolidation of Discovery+ and HBO Max into one new service. Adding Discovery+’s demand share onto HBO Max’s would give the combined platform 19.4% — leapfrogging Netflix as the primary platform for general entertainment streaming.
• It’s worth noting that a potential Hulu and Disney+ combination would far outrank both Netflix and the WBD combo at 24.1%. However, recent comments by Disney CEO Bob Iger have called into question whether that will ever happen.

Audience Demographic Data: HBO Max and Discovery+

• Audience demographic data shows very little overlap between the respective audiences for HBO Max exclusive titles and Discovery+ exclusive titles.
• HBO Max is effectively a ‘three quadrant’ service as is. Its TV series are resonating with older and younger males as well as younger females.
• Discovery+ is largely a ‘one quadrant’ service, with a heavy skew to older female audiences. This makes sense given the content available on HGTV, Food Network, Animal Planet, etc.
• This data shows why Zaslav’s strategy of both moving forward with a combined service, while also keep Discovery+ as a standalone is smart. The Discovery+ audience would likely not support being forced onto a larger — and more expensive — platform. But the combination will add a major amount of content for older female audiences who weren’t being served on HBO Max.

Streaming Originals Demand Share: Global, Full Year 2022

• Demand for streaming original series is a key leading indicator of SVOD subscriber growth.
• Since launching nearly three years ago HBO Max has carved out a solid position in the streaming originals market, and finished ahead of legacy streamers Hulu and Paramount+ (née CBS All Access) with global audiences in 2022.
• HBO Max is among the faster growing services in global demand share for streaming originals over the last three years:
  • Disney+ grew from 4.2% to 10.2% (+6.0%) 
  • Apple TV+ grew from 3.8% to 6.4% (+2.6%)
  • HBO Max grew from 3.3% to 4.8% (+1.5%)
  • Paramount+ grew from 4.1% to 4.2% (+0.1%)
  • Hulu shrank from 5.8% to 5.3% (-0.5%)
  • Amazon Prime Video shrank from 11.8% to 11.1% (-0.7%)
  • Netflix shrank from 55.7% to 39.6% (-16.1%)

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