What Warner Bros. Discovery and Disney Stand to Gain From Streaming Bundle Partnership

If there were any doubts left that the streaming wars as we knew them are over, David Zaslav just crushed them — with an assist from Mickey Mouse. 

The Warner Bros. Discovery CEO and his leadership team spent a significant chunk of the company’s Q1 earnings call Thursday extolling the company’s new partnership with Disney on a streaming bundle packaging Max, Disney+ and Hulu — the first true team-up between major rivals on a general entertainment, intercompany SVOD bundle in the U.S.

And judging by the executives’ comments, the goal is a product that allows both companies to play to, and benefit from, their respective and complementary strengths.

“I think what happened in the 2010s is the industry went down a very dangerous financial path of trying to invest in every type of content in every genre to try and be something for everyone,” explained WBD streaming chief JB Perrette. “And at the end of the day, we know where that led us to. We’re now getting back to all being great at what we do and swim in the lanes we were great at.” 

Of course, while WBD may be framing this as a moment of triumph, it’s hard not to see it as an implicit admission that the company’s strategy for Max was a failure. 

The great relaunch of the service formerly known as HBO Max last year was accompanied by much touting of the new product’s “unrivaled breadth,” with the goal clearly to create a platform with, well, something for everyone. Such was the logic behind the rebranding in the first place: WBD wanted to communicate that Max was a family-friendly platform not limited to the “edgy” HBO brand, as Perrette himself described it. 

Gutting its kids & family and animation content at the same time was a strange way to underline that messaging, however, and the fact that WBD has added just 3 million streaming subscribers since Q2 ’23, when the rebranded Max launched, speaks for itself. 

The primary question now becomes how much WBD stands to gain from its partnership with Disney — because WBD has significantly more to gain from this bundle than Disney does. 

Results from HarrisX’s latest quarterly streaming consumer survey show the primary benefit of the bundle will be funneling Disney+ and Hulu users to Max rather than the other way around. While more than 50% of the Max subscribers surveyed also use Disney+, and more than 60% use Hulu, only about 30%-40% of Hulu and Disney+ users subscribe to Max. 

Furthermore, only 7% of both Disney+ and Hulu users surveyed had previously subscribed to Max (versus 13% of Max users that previously had Hulu, and 11% for Disney+), indicating the vast majority of Disney’s SVOD subs have yet to even try out the platform. 

The potential upside of a bundle, in other words, is significantly greater for WBD than the Mouse House, though Disney could obviously attain incremental SVOD subscribers from the partnership as well.  

Any Disney+ or Hulu users moving to the bundle, moreover, would generate additional revenues for Disney as well as WBD. (No price has yet been announced for the offering, but it will undoubtedly cost more than the sticker price of Disney+, Hulu or Max individually.) 

Still, this announcement should be seen first and foremost as yet another survival strategy as the legacy media companies continue to grapple with declining linear network dollars and a sea of red ink from streaming.  

Though Disney and WBD have both turned modest direct-to-consumer profits on paper, the companies remain far from establishing SVOD as a steady, consistently profitable business. And the frenzy over bundling is, more than anything, indicative of legacy media’s attempts to regain the paradise of the cable model in any way it can.