Warner Bros. Discovery renames ‘HBO Max,’ hedges its bets in streaming

he may be humble warner bros discovery CEO David Zaslav proved this week that he’s definitely a name dropper.

warner bros discovery New streaming service announced on Wednesday, a combination of HBO Max and Discovery+ shows. He will be available in the US on May 23rd, later this year in Latin America, and in 2024 for the rest of the world. With the name “Max” and no “HBO”.

At a superficial level, Warner Bros. Discovery’s decision to drop the HBO Max name is a logical marketing choice. Looking deeper, it begins to look like a microcosm of the existential tension at the heart of the company.

the company is trying to compete netflix and disney Promote the message of financial discipline to not prioritize adding more streaming subscribers while being a streaming winner. It’s a question of quality and quantity, and Warner Bros. Discovery seeks to play both sides.

JB Perrette, the company’s head of streaming, said, “Max is a way for consumers to ultimately say, ‘This isn’t just about giving something to everyone in my household. It’s a place where you can say, ‘This is a service that offers something great for During a presentation introducing Max Wednesday in Burbank, Calif.

Warner Bros. Discovery executives felt the name HBO really limited the audience Because it scared potential viewers.they also Felt the HBO brand could be diluted Discovery’s set of reality TV shows, including “Dr. Pimple Popper,” “90 Day Fiance,” and a variety of HGTV shows, join the platform to more easily serve as background TV than conversation in the office water cooler It is

“HBO is not TV. HBO is HBO. It should be left alone,” Perrette said at the event. “If we had kept our name with our service brand, we would not push it to its breaking point by enforcing the full range of this new content proposition. .”

The company’s logic is reasonable. HBO appeals to certain audiences, but not to certain audiences. HBO fans don’t unsubscribe from the service in response to the name Max, but some who were intimidated by HBO said the flood of content on the service that was clearly different from HBO was enough to scare off adult brands. At some point in the vague, you may sign up.

That was the goal of every media company when Zaslav agreed to merge Discovery and WarnerMedia. 2021But according to Zaslav, that’s no longer a priority.

“I’d rather have 100 million or 150 million subscribers and actually make money, rather than striving for big numbers and ultimately losing money,” Zaslav said. says Mr. told CNBCJulia Boustin after Wednesday’s presentation. “We can see what people are looking at in Max and know exactly what they like and dislike. You can put it on his AVOD. [advertising-supported video on demand] The platform, and some of what they don’t see, can be held non-exclusively in Max, but can also be sold to others. “

“We have a relentless focus on creating great content and monetizing it in every way possible,” he said.

Zaslav also mentioned Warner Bros. Discovery’s free, ad-supported service. the company said will appear later this year.

Warner Bros. Discovery could have kept HBO Max, too. Customers who wanted both Discovery+ and HBO Max could have been offered a bundle at a discounted price. That’s Disney’s strategy. A bundled way to mix & match Hulu, ESPN+, Disney+.

Instead, the company has packed everything into one service. Eventually, it could also include sports news such as CNN or NBA or NHL games. Zaslav said on Wednesday that he would reveal more details “in the coming months.”don’t forget zaslav Dropped CNN+ as a standalone streaming option last year Only 1 month after birth.

Warner Bros. Discovery builds the Max as a one-size-fits-all option, so it has the scale to stay in the rapidly-arriving world of post-cable.

But Zaslav also told investors that he was willing to limit Max’s growth. For him, making money is more important to him than competing with Disney and Netflix to become the biggest streamer in the world.

It’s a delicate balance: disney, Paramount Global, comcastEven NBCUniversal of netflix that is all fighting the same forcesInvestors slashed the valuations of many media and entertainment companies in half last year, heeding talk of pursuing streaming growth at all costs.

What is happening now is essentially a hedge. The media industry knows streaming is the future, but growth is slowing. While defending the value of traditional pay-TV bundles, Zaslav criticizes his previous WarnerMedia administration’s overspending on streaming. He’s looking to give investors another reason to get excited about Warner Bros. Discovery. The message is what Zaslav wants, Generate free cash flow.

“At the end of the day, I’m a free cash flow guy,” Zaslav said Wednesday. , if there is no ARPU, [average revenue per user], we are not helping ourselves and we are not helping our shareholders. “

There are some signs that he may be on to something. Warner Bros. Discovery’s stock is up nearly 50% this year after dropping about 60% last year.

But if you take the two-part name HBO and Max and keep it just Max, it means “bigger” than “quality.”

That was AT&T’s message. It has never been Zaslav’s message.

Watch: CNBC’s full interview with Warner Bros. Discovery CEO David Zaslav

Disclosure: CNBC’s parent company, Comcast, owns NBCUniversal and co-owns Hulu.