[Asia Economy Reporter Jeong Hyunjin] Global entertainment company Warner Bros. Discovery is exploring plans to launch an ad-supported free video service next summer. As OTT (over-the-top) service leaders like Netflix and Disney+ prepare affordable subscription plans that include advertisements to improve profitability, fierce competition over ad-supported video services is expected next year.
According to the Wall Street Journal (WSJ) and others on the 4th (local time), Warner Bros. Discovery revealed this information during its earnings announcement. JP Prete, Global Streaming CEO, stated that they plan to merge their existing OTT services HBO Max and Discovery+ and launch an integrated platform around next summer.
Warner Bros. Discovery was formed by the merger of Warner Bros. and Discovery, and this earnings report was the first since the merger. The company recorded a net loss of $3.4 billion (approximately 4.4 trillion KRW) in the second quarter.
As of the second quarter, Warner Bros. Discovery’s streaming service subscriber count was 92.1 million, an increase of 1.7 million from the first quarter. Considering that Netflix, the number one OTT provider, has 220.7 million subscribers and Disney’s OTT services including Disney+ have 205.6 million subscribers, there is still a significant gap in numbers. However, since the company is restructuring its business and investing in growth areas after the merger, its growth potential cannot be overlooked.
David Zaslav, CEO of Warner Bros. Discovery, said at the time of the service launch, "We saw potential and are exploring faster or free ad-supported services." He added that they will not simply compete for subscriber numbers but will focus on improving the quality of content by no longer including movies on this platform.
The OTT market is highly competitive with various services such as Apple TV, Comcast, Peacock, and Paramount Plus, in addition to Netflix and Disney+. Furthermore, the industry itself is facing difficulties due to subscriber declines and stock price crashes amid rising inflation and recession concerns this year. Netflix experienced a subscriber decrease for the first time in 10 years in the first quarter of this year and is preparing to launch an ad-supported affordable service early next year.
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