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Business News/ Weekend / Most HBO Max Customers Started Using New ‘Max’ Platform in First Week

Warner Bros. Discovery said about 70% of its HBO Max customer base switched to its new Max streaming platform in the first week of its launch, a crucial transition for a company that has made the new service the cornerstone of its strategy.

“We are exceeding expectations," said JB Perrette, Warner Bros. Discovery’s global streaming president, in an interview, adding that hours viewed per subscriber and total content consumed have increased each day since the launch.

Max, which combines content from the company’s two main streaming services—HBO Max and Discovery+—was a key motivation for the merger last year of Warner Media and Discovery. When Chief Executive David Zaslav unveiled Max during an April presentation, he called the platform “our rendezvous with destiny."

Max went live in the U.S. on May 23, just days ahead of the much-anticipated series finale of “Succession," a satirical comedy-drama about the family of a fictional media mogul. More than 2.9 million people watched the finale on Max and on TV, the company said earlier this week.

The new Max service includes not only highbrow HBO fare and the unscripted and reality shows of Discovery and its sister networks, but also movies and TV shows from the Warner Bros. library.

Perrette said that the 30% or so of HBO Max customers who haven’t downloaded Max yet will be prompted to do so the next time they open HBO Max, and remain paying subscribers in the meantime.

Getting Max off to a strong start is of particular importance given the impact that a weak advertising market and cord-cutting have had on the Warner Bros. Discovery traditional cable network unit that includes CNN, Discovery Channel and Food Network.

The theatrical movie business, another important revenue source for Warner Bros. Discovery, is still recovering from the effects of the Covid pandemic as well as changing consumer habits.

Over the past year, major media companies have been reassessing their streaming strategy as subscriber growth slows and programming costs continue to rise. Warner Bros. Discovery initially took heat for pulling the plug on finished films and removing TV series from HBO Max to save money and take tax write-offs. Other companies, including Walt Disney and Paramount Global, have since followed Warner Bros. Discovery’s lead.

Last month, Warner Bros. Discovery said its direct-to-consumer streaming operations would be profitable in 2023, a year ahead of schedule. Streaming is “no longer a bleeder," Zaslav said at the time. For the quarter ended March 30, Warner Bros’ direct-to-consumer unit had adjusted earnings of $50 million, compared with a loss of $654 million a year ago.

Warner Bros. Discovery, which is cutting costs across all its divisions and is prepping for another round of significant layoffs, is still spending heavily on new content for Max. It is developing a television series based on the “Harry Potter" books by J.K. Rowling and new “Game of Thrones" content.

The company, which has more than 97 million global subscribers across its streaming platforms, earlier this year decided to keep Discovery+ available as a stand-alone streaming service in an effort to avoid risking losing a significant chunk of the app’s 20 million subscribers who might not want to pay the higher price to access that content on Max.

“Our strategy is, no sub left behind," Zaslav said when he announced the move.

Discovery+ has lost some subscribers who moved over to Max. “We did see an uptick in cancellations on Discovery+ very much in line with what we expected," Perrette said. The company doesn’t disclose how many subscribers HBO and Max have in the U.S.

About 20% of the content being viewed on Max is from Discovery+, Perrette said, which he said supports the thesis that the two services could cross-pollinate.

Max users are spending more time on the platform. On HBO Max, about 80% of subscribers entering the app would start watching content. During the first week of Max, that figure grew to 90%, Perrette said.

True-crime shows are resonating strongly with subscribers, Perrette said, including “Jared from Subway: Catching a Monster" about the pitchman for the Subway restaurant chain who in 2015 was sentenced to more than 15 years in federal prison on charges of distributing child pornography and illicit sexual conduct with a minor.

Perrette said the transition from HBO Max to Max went smoothly from a technical standpoint, but there was a hiccup that upset the creative community: On Max, descriptions for movies and television shows lumped directors and writers into a single category called “creators."

That led to a stern rebuke from the unions representing writers and directors, the former of which are on strike.

“It is disrespectful and insulting to the artists that make the films and TV shows that make their corporation billions," said Writers Guild of America West President Meredith Stiehm last week.

Perrette took responsibility for the hiccup, and said he is confident that it will be resolved in the coming weeks.

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