Streaming could be heading for consolidation

The upcoming rollout of Discovery+ and HBO Max could herald a new milestone in the streaming era: the start of the wave of consolidation as streaming settles into its next iteration.

Why is this important: Once rolled out, there will be three big players in Netflix, Disney+, and the expanded HBO Max/Discovery+.

  • Along with these three, Amazon and Apple qualify as major players, if only because they have the financial muscle to spend more than anyone else.
  • But for smaller players like Peacock and Paramount+, it could force a rethink of ambitions, as consumers are increasingly demanding about how many services they’re willing to pay for.

Driving the news: Discovery finally went public with what many privately expected: some time after the merger with WarnerMedia, Discovery+ and HBO Max will be combined into one service.

  • In the short term, the two will be bundled together, similar to how Disney offers a bundle of Disney+, Hulu, and ESPN+.
  • But on Monday, Discovery chief financial officer Gunnar Wiedenfels told Deutsche Bank’s annual media, internet and telecommunications conference that the long-term plan was to have “one product and one platform very powerful forms, combined and directly intended for consumers”.

By the numbers: The combination of HBO Max and Discovery+ subscribers could bring Warner Bros. Discovery has nearly 100 million subscribers.

  • Netflix and Disney+ have over 100 million each, with Netflix exceeding 200 million.
  • At the other end, Peacock has only around 9 million paying customers and Paramount + 32.8 million (while Paramount Global collectively has over 50 million streaming subscribers).

What they say : “Neither NBCU nor Paramount have enough humility to recognize they need help, and I don’t expect them to even consider a combination,” said Wedbush analyst Michael Pachter, in Axios.. “Both will likely remain in a confused state until the losses begin to mount, with Paramount+ likely the first to struggle growing.

Be smart: Comcast and Paramount Global already have an overseas streaming partnership with SkyShowtime.

  • Paramount plans to invest more in Paramount+ content, which is coming off its best quarter of growth in its short history. This was immediately followed by Paramount’s action in the tank, as many investors are now wary of the high cost of streaming.

The bottom line: Try as they might, the grim reaper will likely arrive for one or two streaming services in the next 18 months. Warner Bros. Discovery makes sure it doesn’t come for them.

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