Demand Data Shows Warner Bros. Discovery One Of Big Three Integrated Media Giants, Bundling Questions Remain

Tuesday, 12 April 2022, 6:16 am
Press Release: Parrot Analytics

With the long awaited merger of Discovery Inc. and the conglomerate formerly known as WarnerMedia finally closing, Parrot Analytics has assessed where the new company stands in the global race for streaming and entertainment dominance.

In short, Warner Bros. Discovery will launch as one of the Big Three media giants - alongside Netflix and Disney - leading the industry in vertically integrated streaming, a must for competing and staying relevant in the 21st Century.

The combined entity is projected to start out within just 1.5 percentage points of Disney in corporate demand share, a key metric demonstrating the long term viability of media companies as they look to bring their full catalogs onto a unified streaming service or bundle.

Another result of the merger is that only five media companies now control 70% of US audience demand for all TV content, with further industry consolidation likely in the coming months and years.

Warner Bros. Discovery’s undisputed crown jewel asset is HBO Max - 2021’s fastest growing streaming service in US originals demand share, and home to one of the industry's most valuable and highly in-demand content libraries.

The key question is how to best merge or bundle HBO Max with Discovery+, and how to sell that product to consumers with limitless entertainment options.

“If the earliest days of streaming promised the great unbundling from cable giants for cord-cutters, new waves of consolidation amongst the top conglomerates seems positioned to bring back a new great bundling of some kind,” Julia Alexander, Senior Strategy Analyst at Parrot Analytics, said. “It’s clear that Discovery and WarnerMedia’s vast array of content is complementary and in high demand, but concerns about pricing at the ad-free tier and creating a bloated product that detracts from what customers are really looking for loom.”

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Nevertheless, a breakdown of demand data for each platform suggests HBO Max and Discovery+ have the potential to work well together in expanding each other’s audiences, while also being able to reduce churn, thus making the future HBO Max product or bundle one of the few ‘must have’ SVODs for American and global consumers.

Corporate Demand Share - United States, Q1 2022

The corporate demand share chart shows the clearest reasoning for the merging of Discovery’s and WarnerMedia’s assets - combined, they control 18.3% share, just 1.5 percentage points behind Disney (19.8%).
Separately, WarnerMedia would be in a distant third place (11.7%), while Discovery would be in sixth place (6.6%), and Disney would be 6.7 percentage points ahead of second place Paramount Global (13.1%).
Warner Bros. Discovery thus serves as a more immediate threat to Disney’s overall market dominance than they would have otherwise faced.
This data also points to the impact of further consolidation in the media space - just five companies now account for 70% of corporate demand share.

On-Platform Demand Share - United States, Q1 2022

While HBO Max alone (11.6%) is in a healthy third place in on-platform demand share, it is still significantly far behind on-platform demand leaders Hulu (19.8%) and Netflix (18.7%).
Meanwhile, Discovery+ (6.7%) stands in seventh place, showing the popularity of Discovery’s “snack-able” nonfiction programming, but also revealing that the platform on its own would have a difficult time emerging from niche platform status.
A combination of HBO Max and Discovery+ would account for 18.3% of US demand for on-platform content - creating a platform that poses a direct threat to Hulu and Netflix as the dominant on-platform demand SVODs, thus making it one of the de facto streaming homes for tens of millions of consumers.
On-platform demand share shows how big of an audience a given service can presently generate, but separating out what types of content are driving that demand - licensed exclusive, originals, and licensed non-exclusive - is key to assessing long term subscriber growth and retention potential.

Demand Breakdown Per Platform - United States, Q1 2022

This breakdown of the overall demand for a platform into exclusive licensed, original, and non-exclusive licensed programming reveals which ones are set up for long term success.
Audience demand for original content is a key leading indicator of subscriber growth for SVODs - think The Mandalorian for Disney+’s launch, or Stranger Thing’s role in Netflix’s growth in the late 2010s - while demand for exclusive licensed, or library, content is key to retaining those new subscribers and keeping them engaged on the platform until more new original content is released.
HBO Max has the highest demand for exclusive licensed content (this includes HBO’s venerable library), while Discovery+ has the fourth highest.
This suggests that a combination of these two platforms, whether it’s via a bundle or a merged service, will be very sticky with consumers, who will be less likely to churn compared to other SVODs.

Genre Breakdown - HBO Max & Discovery+, Q1 2022

Breaking down each of the platforms by genre demand share shows that HBO Max and Discovery+ will do a good job of complementing, and not cannibalizing, one another’s audiences.
Reality and documentary programming make up 94.3% of the on-platform demand for Discovery+. With so little diversification, this service can build a loyal and passionate base, but is not likely to scale up long term.
However, those two genres account for just 9.3% of the on-platform demand for HBO Max.
Therefore, Discovery+ is filling in a big hole and bringing an entirely new audience to a potential HBO Max bundle or merged service, that HBO won’t have to fill on its own.
Meanwhile, Discovery+ will benefit from being tied to the much more diverse and highly in-demand slate of programming on HBO Max.

Parrot Analytics

Global television demand measurement

Parrot Analytics is the leading global content demand analytics company for the multi-platform TV business. With the world's largest TV audience demand datasets, the company currently tracks more than 1.5B daily expressions of demand in over 100 languages from 200+ countries to reveal the content consumers engage with and watch the most across platforms.

As a trusted partner to some of the biggest media companies and content creators in the world, Parrot Analytics optimises content workflows in real time. The company's TV analytics products result in better production, distribution, acquisition and marketing decisions, as well as accelerated SVOD platform success.