HBO Max and Discovery+ will merge into a single streaming service, Warner Bros. Discovery chief David Zaslav announced on a second-quarter earnings call Thursday.
The media corporation did not reveal a name for the new platform, which it said will launch in the U.S. in the summer of 2023, with other regions to follow in 2024.
The current versions of HBO Max and Discovery+ account for a combined of 92 million subscribers, according to the quarterly earnings report. Warner Bros. Discovery hopes to reach 130 million global subscribers by 2025.
The company is considering a free, ad-supported version of the consolidated streaming platform, Zaslav confirmed on the earnings call. HBO Max's ad-supported tier currently costs $10 a month.
Zaslav is trying to cut costs and find $3 billion in savings — a promise he made to investors after WarnerMedia and Discovery Inc. were formally merged in April, creating one of the largest media companies in the U.S.
The shift in streaming strategy was announced two days after news broke that Warner Bros. decided to shelve "Batgirl" and "Scoob!: Holiday Haunt," movies that were produced exclusively for HBO Max and greenlit by the previous corporate regime.
"Batgirl" and the "Scoob!" sequel will not be distributed on any streaming platform or released in theaters — apparently so the company can take a tax write-down on both projects and try to recoup production costs, according to Variety.
"The decision to not release Batgirl reflects our leadership’s strategic shift as it relates to the DC universe and HBO Max," a Warner Bros. Pictures spokesperson said in a statement, adding that "Batgirl" star Leslie Grace is "an incredibly talented actor and this decision is not a reflection of her performance."
The move sent shock waves through Hollywood, where major studios rarely bury movies altogether.
In most cases, films that do not meet a studio's creative or financial expectations are sold off to a streaming platform or quietly dropped in theaters without a marketing campaign.
In recent days, six films produced exclusively for HBO Max seemed to disappear from the platform, including the Seth Rogen comedy "An American Pickle" and the Covid-era relationship drama "Locked Down," starring Anne Hathaway and Chiwetel Ejiofor.
The reorganization at Warner Bros. Discovery comes at an uncertain time in Hollywood. Netflix’s financial woes have raised questions about the viability of the streaming business, and many executives are worried about the looming economic recession.
Zaslav's vision for the company represents a dramatic departure from that of Jason Kilar, the former CEO of WarnerMedia. (Kilar ran WarnerMedia when the multimedia company was owned by the telecommunications giant AT&T.)
Kilar invested heavily in streaming during his tenure, including instituting simultaneous HBO Max and theatrical releases for Warner Bros. movies in 2021 and overseeing the launch of CNN+ — a platform that was swiftly axed by Zaslav's team.
Zaslav is believed to be more skeptical of the idea that streaming is the end-all, be-all of Hollywood's future. He is keen on big-budget spectacles that can lure audiences to brick-and-mortar theaters — like Paramount's "Top Gun: Maverick" did this year.
"We will fully embrace theatrical because we believe it creates interest and demand," Zaslav said on the earnings call Thursday, pointing to the box-office success of "The Batman" and "Elvis."
Zaslav is also said to favor reality programs and "unscripted" shows that are popular draws on Discovery-owned cable television channels such as the Food Network and HGTV.
HBO Max is home to original shows such as the Kaley Cuoco mystery “The Flight Attendant,” the pirate farce “Our Flag Means Death” and the Emmy-winning show business satire “Hacks,” starring Jean Smart as a veteran comedian.
The platform also hosts a sprawling library of movies and television shows spanning decades, from vintage HBO dramas and the hit NBC sitcom "Friends" to classic films provided by Turner Classic Movies.
CORRECTION (Aug. 4, 2022, 6:41 p.m.): An earlier version of this article misstated the name of the HBO Max’s parent company. It is Warner Bros. Discovery, not WarnerMedia Discovery.