Warner Bros. Discovery reports $50m D2C earnings, expects streaming profitability in 2023

The Last Of Us

Warner Bros. Discovery (WBD) is on track to streaming profitability by the end of 2023, a year ahead of schedule, after posting $50m in adjusted earnings for its D2C segment, and despite an overall revenue loss, according to its first quarter earnings report.

The media giant grew its subscriber base for services including HBO Max and Discovery+ by 1.6 million to 97.6 million at the end of Q1 2023, though reported a 1% revenue loss on the year prior at $2.46bn. The $50m profit however was a much-improved picture over the same quarter in 2022 when it reported a $654m loss, and in the last quarter – Q4 2022 – which saw the segment lose $217m.

WBD CEO David Zaslav said this was a “meaningful turn” and revealed that the company expects its US D2C business to be profitable a full year ahead of previous expectations. “Our US streaming business is no longer a bleeder. It’s hard to run a business when you have a big bleeder,” said Zaslav during an earnings call last week.

According to the report, WBD advertising revenue grew by 29%, driven largely by new subscribers to its ad-supported streaming tiers, while operating costs dropped by 24%. However, content revenue fell by 16% as a result of lower third-party licensing of HBO content.

WBD highlighted WBO post-apocalytpic series The Last Of Us as one of its key ratings drivers, with the show having become the most-watched series of all time on HBO Max in Europe and Latin America.

The D2C segment enjoyed one of the more positive results for WBD this quarter as the poor performance of other segments, such as networks, which saw revenue drop to $5.6m, meant that the company posted just $10.7bn overall revenue – down around 6% from a year ago.

“It is an important time for Warner Bros. Discovery. We’ve come through some major restructurings and have repositioned our businesses with greater precision and focus. And we see a number of positive proof points emerging, with DTC perhaps the most prominent,” said Zaslav, who added “we feel great about the trajectory we are on.”