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It’s Not HBO, It’s Max

Julia Alexander
April 9, 2024

Two years ago, almost to the day, David Zaslav merged his smaller and scrappier Discovery Communications with the historic assets of WarnerMedia, thus embarking on a long debt and integration journey familiar to all of us at Puck. As part of the deal, of course, Zaz and his brain trust announced that HBO Max and Discovery+ would be rolled up to create a mega-streamer that could ostensibly compete with Netflix and Disney+. Then, a year ago this month, Warner Bros. Discovery announced that HBO Max would drop the premium cable network’s acronym from its name, and become the incomparably blander “Max.” 

The strategy reflected a belief that HBO, despite being perhaps the most august brand in the history of American television, was too elite, too coastal—more Curb Your Enthusiasm than Diners, Drive-Ins and Dives—to truly scale. And on some level, the Max rebranding seemed like an attempt to preserve the sanctity of HBO while alleviating pressure to grow that business into something unrecognizable. 

So… how has Zaz’s experiment panned out one year later? As usual, it’s complicated, in part because the answer is slightly different for HBO than for Max. To wit: Max maintains the largest audience satisfaction score among major streamers (88 percent) because of quality programming from HBO, according to research firm Whip Media. The first season of post-apocalyptic drama The Last of Us became the second-most-watched HBO premiere of all time in the U.S., and averaged around 29 million viewers across each episode by the end of the first season, according to HBO. It also was Max’s most-watched series ever in Europe and Latin America, per the streamer. (The next season drops in August.) And HBO reached an entirely new audience—younger and far more female—with Euphoria. In January, HBO took a victory lap as Succession’s final season predictably dominated the Emmys. 

Max now claims to be profitable—a rarity in the streaming business—ending 2023 with an adjusted EBITDA of $103 million. But that number comes with a host of caveats, such as the fact that WBD counts HBO fees from pay TV operators as direct-to-consumer revenue. WBD has also trimmed programming, multiplied third-party licensing tenfold, and moved slower than competitors into new international markets. (JB Perrette, WBD’s global head of streaming, recently told Variety that the U.S. accounts for around 80 percent of Max’s revenue.) Also, Max has failed to surpass 1.5 percent of all streaming viewing in the U.S., according to Nielsen. It not only ranks way behind Netflix (7.8 percent) and Disney+ (1.9 percent), but also behind FAST services like Tubi (1.7 percent). 

Sure, HBO saw the strongest overall demand share (30 percent of Max’s total library) between August 2022 and April 2023, according to Parrot Analytics. This period included the release of new seasons of House of the Dragon, The White Lotus, Succession, Barry, and The Last of Us. But in the 12 months since then, HBO’s share has dropped to about 20 percent. Max also maintains one of the lowest new subscription shares, at 8 percent in 2023, of all major SVODs in the U.S., according to Antenna. (Demand measures what audiences want to watch on an individual platform, while new subscription share looks at where customers are signing up within the U.S.) This puts it in line with Apple TV+ (also 8 percent) and above only Starz (4 percent) and Discovery+ (3 percent and yes you can still subscribe to Discovery+). Max’s 6.5 percent churn rate is on par with Hulu and better than Peacock and Paramount+, but significantly higher than Netflix’s 2 percent and Disney+’s 4.5 percent, also per Antenna. More troubling, as recent WBD earnings reports have articulated: Max isn’t growing. Subscriptions have stalled both domestically and internationally. 


HBO in the Max Age

HBO has evolved throughout its history—from its original boxing-plus iteration in the ’70s, to a cable channel known for its deluge of Pay 1 movies in the ’80s, to its cultural flourishing in the ’90s, then, of course, to its eventual status as the global programmer of the zeitgeist in the new millennium. Its technology has evolved as well. HBO Go launched in 2010, but the app didn’t find its audience until the premiere of Game of Thrones a year later. Viewers, especially young cord-cutters or cord-nevers, sought digital access to a massive genre show. The app grew in popularity as Thrones reached its crescendo, and yet after the series’ sixth season ended in 2016, around 40 percent of customers canceled HBO Go successor HBO Now (according to Sensor Tower at the time) for just one reason—there wasn’t enough other things to watch. 

The Discovery+ and HBO Max merger was supposed to leverage the brand’s patina, while providing an ocean of reliable, bingeable programming to prevent viewers from churning. (It’s easy to make fun of Dr. Pimple Popper and My 600-Lb. Life, but they’re really not all that different from Floor Is Lava or Is It Cake? on Netflix.) But HBO’s challenge in the modern ecosystem requires more than an abundance of shoulder programming. The audience behind streaming is changing, and HBO needs to continue to evolve its tactics and lean into certain programming opportunities.

In scaled streaming, the key to maintaining loyalty is providing a four-quadrant service without losing brand recognition. HBO has strong cards to play when it comes to younger-skewing programming and genre entertainment: Look no further than The Last of Us and Euphoria, to say nothing of Thrones, which helped HBO enter spaces typically dominated by niche channels like Syfy, or streamers like Disney+, without losing the HBO edge. HBO will do itself a favor if it commits to genre storytelling in a definitively HBO way, as appears the case with House of the Dragon. Sci-fi and fantasy storytelling still skews younger, and HBO’s distinct take on the genre can break through the noise that comes with saturating spaces. Watchmen is a DC comic adaptation that feels wholly HBO. Casey Bloys, its top executive, is overseeing the new Harry Potter series, executive produced by the controversial and undaunted J.K. Rowling, which should debut in 2026. (This has been a Zaz favored nation.) These shows tend to be critically acclaimed—important to the HBO brand—but they also find larger audiences outside the core elites, and Max can help them spread even farther.

A consistent stream of hits is also critical to reducing churn. Canceling a service is easier than ever, and younger generations are quicker to drop out. One big show a quarter might have worked for HBO when it sat within a larger cable bill. It doesn’t necessarily hold true when it’s driving an easy-to-cancel streaming service aimed at audiences who have grown used to binge viewing. Other services, like Netflix or Apple TV+, provide relatively stronger four-quadrant programming on a more consistent basis, or serve HBO’s original niche audience for a lower price. Meanwhile, binge viewing and multi-episode drops have changed behaviors. Episodic (weekly) programming made up 38 percent of TV demand in the U.S. between Q3 2023 and Q1 2024, according to Parrot, while binge-format and mixed formats (those that used a binge release before going weekly) made up a combined 42 percent. 


The Next Evolution

The key to success in any new medium is experimenting for an audience that isn’t being reached. And for both HBO and Max, this growth will likely occur overseas. During his Variety interview, Perrette conceded that global expansion is a streaming priority. 

But there’s not yet a consensus within Warner Discovery on what an international rollout even looks like. For example, the company stopped producing local content in the Nordics, Central Europe, the Netherlands, and Turkey two years ago, which analysts interpreted as an admission of defeat in foreign territories. In reality, though, those regions don’t require much local content investment from an entity like WBD when the company can partner with local providers and provide marquee programming (like HBO series and Warner Bros. films) to sustain an audience. Zaslav, Perrette, and C.F.O. Gunnar Wiedenfels need to figure out the critical markets where an investment in originals is required, versus others where strategic partnerships will do the trick. It’s a math equation, given that they are trying to scale while servicing $40 billion in debt and readjusting EBITDA guidance downward. 

Netflix is arguably the only company that has succeeded internationally in direct-to-consumer because it is the only company that has needed to think about it. Seventy percent of Netflix’s subscribers live outside the U.S., and English-language programming accounts for only 28 percent of total demand among that audience. (English programming, meanwhile, accounts for 52 percent of Max’s demand outside the U.S.) In the process, Squid Game, Physical 100, La Casa de Papel, Dark, and other premium local programming suggest that Netflix has already beaten HBO at its own game overseas

HBO can learn from this. Zaz may seem like Hollywood’s go-to villain, and I’ve certainly questioned a few of his decisions (my lasting legacy may be harping on better “co-exclusive” licensing decisions). But he did get it right in a 2022 earnings call: “People are consuming more content than they ever have, but it has to be great content.” After all, consider a few of the big disadvantages of the streaming era: discoverability tools, which are designed to pair the right viewer with the right title, have siphoned audiences into larger silos than ever before; the deluge of series and films means that audiences are inundated with mediocre television; and it became harder and harder to generate buzz for new shows, while older series were only working on platforms like Netflix because of scale. 
HBO is the antithesis to streaming’s great disadvantages. But everyone is trying to create their own version of HBO, and doing so with varying levels of success. The key to allowing HBO to help Max isn’t proceeding as normal. It’s asking what WBD can do to make HBO grander while simultaneously protecting it from having to go simpler. No one is looking to HBO for the next NCIS. That would dilute the brand. But for audiences within that matrix that HBO isn’t currently capturing, what percentage can it capture with engaging, high-quality programming, domestically and globally? HBO didn’t make Riverdale; it made Euphoria, but the audience overlap is the important lesson there. Quantity does not beget quality, but quality doesn’t mean it has to remain small.