Warner Bros. Discovery loses 1.8 million subscribers across HBO, Discovery+, and Max in Q2

Warner Bros. Discovery released its second-quarter earnings results, which indicated a decline of 1.8 million streaming subscribers across its HBO, Discovery+, and the newly combined streaming service Max. The total number of users now stands at 95.8 million, down from 97.6 million in the first quarter.

The drop in subscribers is likely due to customers who had overlapping accounts, i.e., both Max and Discovery+, deciding to cancel extra subscriptions. This trend was anticipated by both Warner Bros. Discovery (WBD) and analysts. For instance, Goldman Sachs analyst Brett Feldman estimated an overlap of about 4 million subscribers between HBO Max and Discovery+.

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WBD’s CEO, David Zaslav, acknowledged the subscriber disruption during the earnings call but reassured investors that the migration to Max has mostly been successful, with the majority of U.S. subscribers being seamlessly transferred. He also noted that the churn rate (the rate at which subscribers cancel their subscriptions) during this process was lower than expected.

HBO Max was introduced to subscribers on May 23, and in the first week of the launch, around 70% of existing HBO Max subscribers made the transition to the new platform. However, during an interview with the Wall Street Journal, J.B. Perrette, WBD’s global streaming president, revealed that Discovery+ also experienced a loss of subscribers.

The second quarter, covering the period from April 1 to June 30, marks the first time Max subscriber totals have been included in the earnings report. The impact of Max on the company’s results will be fully visible in the third quarter.

Total revenues for the second quarter reached $10.36 billion, slightly lower than the forecasted $10.46 billion by Wall Street analysts. The company reported a net loss of $1.24 billion, up from $1.07 billion in the previous quarter. Since the merger, WBD has managed to pay down $9 billion in debt, including $1.6 billion in the second quarter.

Before the launch of Max, the company had projected that its U.S. direct-to-consumer business would become profitable by this year. The performance and adjustments in the coming quarters will be closely watched by the industry and investors as the streaming landscape continues to evolve.