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Cord-Cutting Shake-Up Ahead

Cord-Cutting Shake-Up Ahead

Will WarnerMedia x Discovery Dominate?

May 25, 2021

Last week, AT&T announced that its subsidiary WarnerMedia would officially merge with Discovery, Inc, forming a new (publicly traded) company that includes major brands such as HBO, CNN, Cartoon Network, and much more. This merger brings with it one of the biggest shake-ups in the cord-cutting market but raises a ton of questions about the fate of several streaming services.

Streamer's Spotlight: So...What Happens to Discovery+ and HBO Max?

Let's start with the good news: It's great that HBO will no longer be under AT&T's ownership. AT&T has done a rather poor job of managing its cord-cutting operations. Just take a look at DirecTV Now/AT&T TV Now/AT&T TV. Or AT&T WatchTV. The company has a history of running its streaming services into the ground. The news is a bit of a refresher for those who enjoy the content it holds.

But we're also dealing with, yet again, the problem of consolidation within the cord-cutting market. It's a double-edged sword. More streaming services means consumers end up having to pay more to get everything they want because of siloed content. But more services also means greater variety and lower prices.

Discovery+ and HBO Max Combo Pack?

This is simple: The new Discovery/WarnerMedia company would be crazy not to do what Disney has been doing with its various streaming services. If you recall, after it launched Disney+ and acquired a majority stake in Hulu, Disney began offering a combination package that included Hulu, Disney+, and ESPN+. The WarnerMedia/Discovery merger gives these two companies the opportunity to do exactly this with their various networks.

For example, they could soon roll out an HBO Max and Discovery+ combination pack. The pricing on that would be a bit hard to predict. However, the two services bought separately cost about $20. Presumably, the new company would likely offer both for around $16.99 per month.

Other Services Will Be Forced to Adapt

Discovery, Inc. owns a ton of content across its many properties. So does WarnerMedia. The new merger would bring those content libraries together with a tour-de-force that would give the new company tens of thousands of hours of on-demand content ready to roll. Competitors like Disney and Netflix will be forced to get creative with how they compete. And one thing that would allow them to do that?

Free with ads.

The "free with ads" model is already taking off. It's easy to see how this model would allow competitors like Netflix and Disney to better compete against such a heavyweight. Other providers, including NBCUniversal's Peacock, have been dipping their toes into this model. For consumers already buried under half a dozen streaming service payments, free options (with limited library access) is probably going to spur continued growth.