We’ve documented in detail how the whole AT&T–>Time Warner–>Warner Brothers Discovery merger process has been a pointless mess, resulting in no limits of layoffs and damage to the underlying brands. What was supposed to be a gambit by these companies to dominate streaming TV, wound up being a very expensive act of seppuku by over-compensated executives clearly out of their depths.
With streaming subscription growth saturated, the market has been forced to get “creative” in order to feed Wall Street its expected quarterly returns. That has meant sagging quality control for streaming services like Max, and a steady parade of price hikes that generally haven’t been worth it.
Speaking on the company’s recent conference call, Time Warner Discovery executives are making it clear that all manner of new restrictions and price hikes are on the way, just in case you were looking forward to more of that sort of thing. Among them will be a crackdown on the diabolical “password sharing” the industry used to view as helpful free advertising:
“During the earnings call for parent company Warner Bros. Discovery (WBD) for its fiscal Q3 2024, which ended on September 30, WBD signaled that it’s gearing up to roll out its next strategy for growing streaming revenue—charging subscribers extra for sharing passwords—over the next few months. This will start with “very soft messaging” toward Max users before the crackdown intensifies in 2025 and 2026, WBD CFO Gunnar Wiedenfels said.
Wiedenfels admitted that on their own, password crackdowns are “a form of price rises.”
Executives say they’re also exploring, like Amazon, steadily increasing the number of ads paying customers see. And they will, of course, just be rising prices steadily until they see a mass exodus of subscribers:
“WBD also hinted at potential price hikes for Max today. During the earnings call, JB Perrette, WBD’s CEO and president of global streaming and games, noted that although Max has raised US subscription prices twice in the past two years, WBD believes it can get away with even higher prices: “We think the premium nature of our product in particular lends us to be – to have a fair amount of room to continue to push price.”
Except the “premium nature” of the product doesn’t exist anymore. Any cachet enjoyed from the HBO brand has largely been killed off thanks to executives’ prioritization of lower-quality reality TV dreck as they pursue lowest common denominator engagement bait at scale. There’s still occasionally good art on Max; but the heyday of HBO as a prestige production empire is long, long dead.
Meanwhile the kind of things that customers actually want (lower prices, better quality, better customer service) cost money and erode those sweet quarterly returns. The kinds of things customers and labor don’t want (price hikes, sagging quality, layoffs, weird new restrictions on access) are where the current growth and revenue boosting resides. So guess what you’re going to get.
It’s not enough for a publicly traded company to provide an affordable product that people really like. That doesn’t achieve exponential, impossible growth. To get that (or the illusion of that) requires a certain aggressive creativity. And if streaming can’t obtain it via annoying price hikes and restrictions, as Time Warner Discovery CEO David Zaslav has made clear, they’ll achieve it with pointless new harmful mergers under Trump. These folks insist they’re just engaging in the cold calculus of cost efficiency, but you’ll notice that excessive and unwarranted executive compensation somehow always avoids scrutiny.
Again, I suspect what’s next for the industry is a whole bunch more consolidation and mergers to try and minimize any serious price competition and to nab tax breaks. From there I suspect you’ll start seeing a greater fixation on finding creative new ways to “reduce churn,” which will likely (now that the FTC will be lobotomized under Trump) include complicated new tricks to make cancelling services more difficult.
When customers inevitably revolt and flock back to piracy (which is already starting to happen), execs will freak out and blame everyone but themselves for the trend (VPNs! Generational entitlement! The wokes!), and the innovation and disruption cycle will repeat itself all over again.
