TBI Weekly: Why WBD’s backtracking offers regional opportunities

The Informant

Warner Bros. Discovery (WBD)’s decision to end the global roll-out of HBO Max and its backtracking on regional originals underlines the state of flux the industry is in, writes Richard Middleton. 

Under a relatively temperate – and befitting, as it turns out – Toledo sky at Conecta Fiction last month, Banijay’s Lars Blomgren all but predicted Warner Bros. Discovery (WBD)’s decision to end its original programming play in the Nordics.

The astute exec was speaking to TBI in Spain about the waxing and waning of the world’s production industry – and in particular the scripted side of it – as companies that were once fuelling the business to breaking point back track in certain parts of the world.

Targeted action

“Streamers wanted to grow everywhere in the early days but now I see signs of change,” Banijay’s global drama chief told TBI in June, ahead of this week’s news that WBD was halting development of local originals for HBO Max in the Nordics, Central Europe, the Netherlands and Turkey. France and Spain were left unaffected.

“In territories where subscription is driven by local content they will produce, but in territories where you get your subscriptions because of predominantly US content – let’s say the Nordics, perhaps – that’s not the case. That’s not the case with Spain or France, but Northern Europe in particular.”

Kamikaze

Then came TBI’s exclusive that HBO Max in its current guise will not make landfall in France as had been planned – or indeed in any another country. Its expansion into parts of Europe in March will now be its last act as a standalone product: instead, an as-yet unnamed offering that also includes Discovery+ will be launched.

This looks likely to be 2023 but who knows what it will be called. Surely, DMax+ is missing the marketing open goal of having the ‘HBO’ trademark to call on – but then who knows whether it will actually include the full gamut of HBO programming?

What is known is that it will combine thousands of hours of content but as this week’s news has shown, it won’t be the whole WBD catalogue, which makes absolute sense.

Series that had previously been touted as killer content for the global service – such as Denmark’s Kamikaze – have now been withdrawn in certain regions to allow sales to third parties, presumably because that strategy produces more immediate – or at least more tangible – revenue than it does from having yet another original drama appearing on your global streamer.

Third-party re-evolution

That might have crossed the mind of WBD chief David Zaslav, who had talked around this subject in April when he told investors that the company was reevaluating its content distribution strategy as the giant company looks ahead to a “noisy” 2022.

Wall Street has become rather demanding in its wish to see profits – WBD’s share price has tanked from $25.50 a pop at launch in April to a touch above $14 today – and with $3bn to find in synergy savings, the reality of a “noisy” 2022 really means yet further pain for staff from both WarnerMedia and Discovery.

But it also looks likely to mean more supply coming onto the market from US studios as content owners look to maximise returns on shows. And the way to do that seems to be to sell direct, rather than put it all onto a single global platform.

There is of course little chance that WBD will sell the family silver to Netflix again, and that hugely valuable HBO deal that Sky enjoys in swathes of Europe also looks unlikely to be renewed. But then again, who knows – if the price is right?

Either way, the row back on global domination by Hollywood-based streamers is in evidence. Not only is WBD cutting original spend, Netflix is slowing its outlay and the flow of originals for Disney+ and its sibling Star brand is far more focused, as TBI reported last week.

In some respects, there are likely to be few winners from this deceleration in spending, with less money in the system and fewer buyers for producers’ ideas. Yet balancing the money going into shows with the revenues being returned by subscribers at some point always had to find its equilibrium.

The real winners, it seems, could be those commissioners with a regional outlook – either global streamers with a flexible commissioning strategy or genuinely local operators. When put together, the world’s commissioners can often tot up to more than the sum of their parts – and for businesses looking to squeeze more value from their dollar, that will be key.