Exclusively Amazon’s: the Warner Pass

There has been plenty of news about Warner Bros. Discovery (WBD) this week. Not unusual about that in recent months, but four of the most recent stories are particularly striking.

First, WBD revealed it would increase the domestic US price of its HBO Max streaming service as it fights to stem heavy losses. The dollar-a-month increase is the first ever price hike for the platform.

Internationally, the company is continuing to apply the brakes to its direct-to-consumer drive as a global strategy in favour of a mix involving the old way of making money from TV content: licensing it to third-party distributors. This week saw it strike a deal with SkyShowtime to dispose of 21 former HBO Max originals.

The Comcast-Paramount JV picked up exclusive rights to about 150 hours of new, never-aired shows and content that has previously been seen on HBO Max, many of them victim to WBD’s well-documented cost-cutting drive.

The move gave the new streamer access to original programming “well ahead of plan” in CEO Monty Sarhan’s words.

WBD has also previously indicated it could sell ex-HBO Max content to third-party FAST services as it seeks to maximise revenues from whatever sources prove to be most lucrative.

Not all the news flow is about making WBD content more widely available. This week also saw the Warner TV channel disappear from French pay TV operator Canal+ after the pair failed to strike a new distribution deal.

While WBD said it regretted the move and hoped that Warner TV would return to French screens soon, the dispute immediately       fuelled speculation that it could be connected to the US company’s own plans for streaming in France.

WBD had in fact already pulled content from French pay TV service OCS when the pair failed to renew their agreement. OCS, already struggling, is now set to be acquired by none other than Canal+.

Partnership with Amazon

Which brings us to the third and most striking Warner Bros. Discovery story of this week – the US company’s deal with Amazon to team up with Amazon in France.

Under this deal, unveiled yesterday, WBD will now make a raft of content available exclusively on Amazon Prime Video Channels in France via the ‘Warner Pass’.

The Warner Pass will offer viewers access to all of HBO and 12 channels including Warner TV, Eurosport, Discovery Channel, Cartoon Network and CNN, as well as their associated on-demand services.

Exclusive content includes landmark series The Last of Us, which will be made available to Prime subscribers at no extra cost, while other HBO content will be available for a subscription.

The agreement with Amazon is reportedly set to run until the end of 2024, after WBD is supposed to launch its new combined streamer in the country. That would indicate that the two offerings will run in parallel. So what is the rationale for this move?

Unlike HBO’s presence on Amazon Prime Channels in the US, the French deal is exclusive, effectively replacing WBD’s previous arrangement with OCS. It is a deal that strengthens Amazon as a serious contender in French pay video and weakens Canal+.

From WBD’s perspective, there is no indication that the Warner Pass will disappear when the company launches its combined streamer, although it is likely that WBD will prefer something non-exclusive as it seeks to populate its own service.

It is possible that the Amazon deal could be viewed by WBD as a hedge – an attempt to test the market and see what distribution model works best.

Direct-to-consumer is attractive because it cements a relationship between content provider and consumer and provides access to first-party data that can be used in a multiplicity of ways – whether to upsell customers to new packages or offer addressable advertising. But building that unique relationship with end consumers comes at (huge) cost and uncertainty. If licensing programming to others delivers a better return and carries less risk, that can also be attractive.