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Gunnar Wiedenfels, the chief financial officer for Warner Bros. Discovery, believes you’re not paying enough for your favorite streaming service.
Speaking Thursday at Citi’s 2023 Communications, Media & Entertainment Conference in Scottsdale, Ariz., Wiedenfels said streaming services have been priced to to get subscribers at the expense of profitability, describing the approach as a “land grab.”
“There’s no doubt that these products are priced way too low,” he said.
Wiedenfels did not say whether the revamped Warner Bros. Discovery streaming service, which will combine HBO Max and Discovery +, will ask for higher fees from consumers when it rolls out later this year. Current plans for HBO Max start at $9.99 a month.
But he indicated that it will be a more robust offering that could support a higher price.
“We will with the combined product bring something to the market that I have no doubt is going to be the best streaming product in the marketplace and we’re not priced at that level right now in the U.S. more so internationally,” Wiedenfels said. “A lot of the initial push when HBO Max was rolled out internationally was strive for the largest number of subscribers, not necessarily value. So there’s a lot of opportunity, I think, as deals come up to adjust pricing on the positive side.”
Wiedenfels noted that a number of streaming services have raised subscription prices over the last two years and more will follow.
“I think there is a building consensus that you know this phase of dumping pricing is over,” he said.
Wiedenfels also said Warner Bros. Discovery’s cost-cutting measures, the talk of Hollywood in recent months, are done. The company, to reduce a $50 billion debt, has laid off employees and purged content from HBO Max to save money.
The measures included shelving a $90-million direct-to-streaming “Batgirl” movie and removing “Westworld,” an acclaimed HBO series, from HBO Max in order to save on royalties. CNN has also been forced to reduce costs with staff reductions and ending the acquisition of films and series from outside producers.
Wiedenfels said the company’s austerity measures were necessary after the gold rush to create more content to compete with Netflix. He noted how other companies will follow.
“We shaved off a lot of the excess last year, and I think that’s something that everyone else in the industry is going to go through,” Wiedenfels said. “We’re coming from an irrational time of overspending with very limited focus on return on investment.”
Wiedenfels said HBO Max is seeing less “churn” — the turnover of streaming customers — and greater engagement, even while pulling back on marketing costs. But he acknowledged that the new service using content from across the the Warner Bros. Discovery portfolio will be superior to its current offering.
“We’re going to come out with a great product from a consumer experience perspective and that’s frankly the biggest holdback,” Wiedenfels said.
