‘Max’ Unsurprisingly Loses Streaming Customers After Several Years Of The Dumbest Decisions Imaginable
We’ve documented in detail how the whole AT&T–>Time Warner–>Warner Brothers Discovery merger process has been a pointless mess, resulting in no limits of layoffs and damage to the underlying brands. What was supposed to be a gambit by these companies to dominate streaming TV, wound up being a very expensive act of seppuku by over-compensated executives clearly out of their depths.
After paying a premium for the HBO brand just to deprecate it, steadily eroding the quality of their streaming catalog (how many reality TV shows can there be involving people having sex on an island?), firing countless employees, cancelling popular shows, raising prices, and implementing all kinds of new restrictions, execs at Warner Brothers Discovery unsurprisingly saw 700,000 subscribers head for the exits last quarter.
It’s, of course, not good enough for Wall Street to create a profitable product people like. The need for improved quarterly returns at any cost always creates a sort of self-cannibalizing doom cycle. It’s made worse as the sector consolidates in order to chase short-term tax benefits.
Max is now deep into this process of enshittification, consistently charging more money for worse product, while creating pricing funnels to try and drive people to the most expensive plans possible if they want access to basic features like 4K. The value erosion is near constant, as Wired illustrates:
“Last January, Max increased its prices from $15 to $16 for its ad-free version. But then in May, when HBO Max became Max, the company announced its Ultimate Ad-Free tier, which costs $20 and includes 4K streaming. Not too bad, especially when you consider Netflix’s Premium tier is also now $20 per month. Max, though, recently emailed its legacy HBO Max customers letting them know that although they’d been allowed to have 4K at their previous $16-per-month price tag, that deal would be ending in December. Suddenly, Max doesn’t seem quite as worth it—especially when it’s ad-supported plan is only $10.”
At the same time, executives at these companies want to drive everybody to ad-based tiers because ad revenue has more growth potential than subscription revenue, given the saturated market. But that risks making the underlying product more annoying overall (see Amazon’s decision to charge customers who already pay $140 for Amazon prime, an additional $3 a month to avoid ads).
Revenue at Max was up 5 percent during the year, but that’s not necessarily a sign of health. Another dumb decision made by the brain trust at Warner was to begin selling access to their existing HBO content catalog to competitors, which is providing a big boost of money up front, but comes at the risk of further eroding the company’s market share longer term.
Warner Bros Discovery remains saddled in debt and run by the kinds of folks more interested in short term tax tricks than long-term brand quality. It couldn’t be more obvious these folks want to push their luck and consolidate the sector until streaming closely resembles the mess that was 90s cable, at which they’ll retire and their companies will be disrupted by better options, as the silly cycle continues in perpetuity.