Ahead of his anticipated keynote at Series Mania Festival, JB Perrette, president/CEO of global streaming and games atWarner Bros.Discovery,unpacked plans for its standalone service Max in Europe beginning in May.
Sitting alongside Clement Schwebig, who heads France and a string of French-speaking territories for WBD, Perrette spoke to PvNew about the streamer’s commercial and editorial goals in big European markets, addressed its early track record in the U.S. where it bowed last May, and shared his insight on the global streaming landscape and ongoing challenges.
The standalone streaming service will first launch in the Nordics, Iberia, and Central and Eastern Europe. The launch in France, Poland, the Netherlands and Belgium “follow closely” and will happen prior to the Olympic Games in July. Along with a premium plan, Max will also boast a basic plan with ads which will first be available in Norway, Sweden, Denmark, Finland, Netherlands, Romania, Poland, France and Belgium.
Warner Bros. Discovery launched Max a year ago in the U.S.. What’s your assessment of its track record so far?
It’s almost two years since these (Warner Bros. and Discovery) came together. In August of 2022, we laid out for the first time our new vision for streaming strategy as the new company. And we said a couple of things are just important because I think it sets the context for where we are now. We said we’re not going to keep going with the subscribers at all cost kind of mentality that was driving both companies plus the industry. And our focus was going to be profitable growth. That was one. Number two, that it was going to be a multi year journey. It’s not going to happen overnight. And we gave a three year outlook, which we said at the time we were losing two and a half billion dollars. We obviously had the two different products, HBO Max and in some markets it’s discovery+, that we were going to be migrating and by 2025 it would be a billion dollars in profit and 130 million subscribers globally. But we would prioritize profitability versus hitting a subscriber number. We’re now one year into the three-year plan to reach profitable growth and the good news is that we hit the profitability faster than we expected — we went from losing $2 billion in 2022 to making $100 million last year. So we turned around a $2 billion loss in one year.
Do you think there’s room to become even more profitable going forward with Max’s launch across Europe?
We always expected the growth part to come in the next two, three years because our business right now is – unlike Disney or Netflix, where the majority of their revenue and subscribers are outside the US — our business today is still, revenue-wise, 80% in the U.S. And HBO Max or Max are only available in less than half of the addressable markets and subscriber bases that Netflix and Disney have. So we’re not in the big four European markets yet. We’re not in the U.K., we’re not in France, we’re not in Germany, we’re not in Italy, we’re nowhere in Asia. We’re not in the Middle East, we’re not in Africa, we’re not in Spain. So the next phase of our kind of three year plan, which is exactly where we expected to be in terms of the rollout, is our international roll out. We launched in Latin America in 39 markets in February. We obviously are now launching in about 25 markets here in Europe in this first wave over the next couple of months. And then there will be more markets to come but we’re still not going to be in the three big European markets until later, until our deal with Sky ends.
What do you anticipate in the big European markets, which are mature and very competitive already with a wealth of streamers available?
I think we recognize that we’re sort of late to the party. On the other hand, we’re not in the widgets business. We are selling something that is unique, IP brands and franchises that you can’t get anywhere else. And from a storytelling standpoint, we’re quite confident that these are stories and brands and franchises that people love and will want to come see once we get Max launch. But we also recognize, which is part of why we’re leaning into partnerships to accelerate the growth, because we want to get in a market that already has, as you said, a lot of streamers in it have been around for a while. People’s purchasing power is under pressure with inflation and gas prices and all the rest of it. And so we’re working really hard with existing and new partners. And you take an example of Spain. In Spain, we had launched HBO Max with Vodafone as our exclusive partner. And we launched, obviously, our direct product, which has been great, but ultimately kept us somewhat more limited. And with the launch of Max, you’ll see us expand to basically being available and partnering with all of the big mobile telco broadband pay TV platforms.
In France you have an exclusive partnership with Prime Video where your content is available on an offer called the Warner Pass.
Yes, exactly. Because obviously we don’t have Max in the market yet. We have worked with Prime in a different way than in France, in the US, in Brazil and Mexico where they sell. Warner Pass is totally unique to France. We don’t have that anywhere else.
Can it continue to exist or is the Warner Pass going to disappear?
The Warner pass will go away when Max comes to the market.
Tell me about the decision to introduce an ad plan.
We’ll have different plans. One tier will have advertising at a lower price, higher price with no ads, and then even higher price with the highest video quality, more concurrent streams, more downloads, not dissimilar to the way that Netflix has broken out their packages.
How important for you is original content, original programming?
Super important. I think we fully recognize that over time. First of all, I think our view is over the next 5 to 10 years, the world’s going to get to a place where there’ll be three to five big global streamers of which we view ourselves as one. And the ones who will be successful will have a strong combination of great international storytelling with great local storytelling. And so local storytelling is really important. And so the good news in know, stepping out of France, because France is less true of this than other markets like the Nordics and Italy and Poland and other parts of even Spain, we’ve been investing in. We produce almost 4500 hours of local original programming today across Europe. And so we understand the importance of local. A lot of that content will be going on the platform from the beginning, and then we are investing, obviously, and Tim all and the team announced here in France, more investment into local original. And so it’ll be this combination of great international stories that travel as well as great local stories. And by the know, some of those local stories hopefully will become great international stories that travel as well.
Is the model to have local shows that you license around the world or local shows that are available on Max globally?
Some will be originals that we hold, and some also will look locally at doing some coproduction. It won’t be a one size fits all, there will be a mix, but certainly for a lot of the originals that we will finance, it’ll be global rights and the product will go everywhere on Max. Creatively, we want to do great local stories for the local market. From a business distribution standpoint, we will take those great local stories and try and make them travel and make them merchandise them in the product, try and have them find a bigger global audience. Some will, some won’t, but we’ll do everything we can to try and get those stories to travel.
HBO is so well known for delivering really bold, thought-provoking, well-made series and documentaries. How are you going to preserve that across these different territories?
It’s a big part of the debate and frankly, some of the noise around taking the HBO out of the name. We recognize and value enormously the quality and the heritage of HBO. And so part of taking the brand out of the name was to try and privilege it and protect it, because ultimately, having it be in the name of a service that was going to have a much broader set of content, what we wanted to do was keep the quality elements of HBO, not just for HBO, but in all the genres that we have. As we broaden the range of content that you wouldn’t at all normally attribute to an HBO kind of brand, we didn’t want HBO to carry the weight of the whole thing, because ultimately the fear was you’ll break the brand and the brand will start meaning nothing.
The slate of scripted shows that were presented yesterday here at Series Mania gave us hope that you’ll do things differently than other streamers who focus on testosterone-heavy action thrillers.
Clement Schwebig: It’s great feedback because we’re trying to do that and it’s hard because it’s a little nuanced in the sense that we are not trying to compete on just volume. Yeah, we’re trying to compete on something different, but that’ll make people think. It will be impactful.
Since you’re kind of late in the game, what are the pitfalls that other streamers fell into that want to avoid at all costs?
Well, I think there are a couple. Everything from the sort of strategic to the more tactical. In the strategic category, I’d say we’ve also been very clear that we’re not religious about having to be in every market everywhere. If we don’t think we can be a top three streamers measured by scale, shareable audience and profitability within three to five years. Like India is a perfect example. Massive market, incredible market, but it’s a bloodbath in terms of people unable to make any money in that business. We looked at it and said, we don’t think we bring anything that’s going to be different and allow us to compete and be one of those success metrics. We want to try and build legitimate businesses where we think we have a real path to build a legitimate business. And so we’re not trying to be Netflix. We’re not trying to chase scale. We want to actually build and be in markets where we think we have a credible shot of being a winner. And I think on the one level down, we just talked about it in terms of content: We’re not just trying to chase volume. We are going to be very measured and smart about trying to keep our quality bar high, invest in a smart way, tell different kind of stories.
You’re launching ahead of the Olympics. That’s a really good timing.
One thing we’ve learned not from our competitors but based what we’ve done is the importance of (timing). Unfortunately, last year when we launched in the U.S, we had one of our weakest movie slates. All the best ten full HBO or the biggest ten full HBO content were out of cycle because of the strike. We had to move stuff out of the summer and the fall because we couldn’t get the talent to promote, etc. So we launched into, honestly, one of the weakest content lineups in terms of quantity as well as some of our biggest tentpoles weren’t there. We launched with a much better slate of local originals. Europe is by far our best one yet because we launched with “House of the Dragon” season two, and then on the back with the Olympics. And then we go into “Penguin” and then we have a Dune series coming at the end of the year. So the first six months is like one of our strongest lineups ever. And then in 2025, it is epic with “Last of Us” coming back, “Euphoria” coming back, “White Lotus” coming back, and a really good film slate. And then you sort of look on the horizon and you have the “Harry Potter” series coming. So it’s an amazing time to be launching.
