David Ellison has stated his intention to “put … together” Paramount+ and HBO Max when his giant acquisition of Warner Bros. Discovery is complete. But which major streamer will absorb the other? And how would that work anyway?
In terms of its reach, HBO Max is bigger — then again, so is Warner Bros. Discovery as a company, but that isn’t stopping Paramount Skydance from being the buyer. It’s good to be a billionaire.
Paramount+ actually has the larger library of the two and the important incumbent advantage. The rebuilt HBO Max (“Max” was a nightmare on Roku devices), however, boasts the newer tech stack.
Perhaps there’s a third option: neither of the above.
When asked by The Hollywood Reporter, Dan Rayburn, a streaming media expert, consultant and chairman of the Streaming Summit at the NAB Show, punted on the main question. But as fourth-down decision analytics inform, sometimes punting is the right play.
This idea of Paramount+/HBO Max integration is frankly “too new” to “contemplate how you can merge two streaming services of that size together,” Rayburn told THR. “There’s no way you would know.”
Here’s what we do know: “We … plan to put the two services together, which today gives us a little over 200 million direct to consumer subscribers,” Ellison said last week. “We think that really positions us to compete with the leaders in the space.”
“The combined offering, given the amount of content and what we can do from the tech side, really will put us in a position to be able to compete with the most scaled players in DTC,” he continued.
Rayburn is reading between Ellison’s lines.
“You’ll notice, though, [Ellison] didn’t use the word ‘combining,'” Rayburn said. “There’s a reason for that. And the reason for that is he doesn’t even know himself, because the work required if you want to combine services is so extensive and so unknown at this time.”
Ellison did use the word “combined,” but Rayburn believes the mogul is leaving the door open for more of a bundled or complementary approach.
Think Disney+ and Hulu. At first, Disney was just one partner in the joint venture. Then it acquired Fox’s one-third stake, then Comcast’s. (CBS, which had Paramount+ predecessor CBS All Access, never wanted in on Hulu.) Today, Hulu can be accessed via a tile on Disney+ or still as its own standalone platform. While Hulu is not going away, it is effectively being phased out as a standalone app as Disney pushes users toward its unified approach. Abroad, Disney sunsetted Star in favor of Hulu.
Let’s take Ellison at his word(s) and envision Paramount+ HBO Max — a spokesperson for Paramount confirmed for THR Ellison’s stated intention is for the two services to become one. It is a lot heavier a lift than simply picking a tech stack, buying more cloud storage, importing the other’s content, and freshening up the interface to reflect the combination.
The exiting iterations of Paramount+ and HBO Max have both functional and regional differences. Paramount+ has 24/7 live linear channels, HBO Max does not. HBO Max is available in more than 110 territories and countries worldwide, Paramount+ occupies about half that number. This endeavor is not quite plug and play.
“You have all the frontend issues, you have all the backend issues,” Rayburn said. “It is more complex than pretty much anybody in the media understands.”
Other than himself, I guess he means. But do go on, professor.
Another problem: native, intimate knowledge of the individual platforms will be lost in the name of the $79 billion in debt this $110 billion merger will create.
“There’s gonna be a lot of layoffs. We know that,” Rayburn said. “So if you lay off a whole bunch of people at one company over another that has expertise of the platform or how it worked… to figure all that out is extremely time consuming.”
Time is very much not on the side of a smooth Paramount+/HBO Max combination. Due to the pending nature of the Paramount Skydance/Warner Bros. Discovery merger, the two companies are not allowed to begin any new collaborative work. They can’t even directly communicate on future operational strategy until the deal is complete. Ellison believes that is six months away, but nobody else does.
And if you think they’re lowkey working some stuff out, think again. Paul Pastor, the chief business officer at OTT cloud solutions company Quickplay, says the KPIs (key performance indicators) that decide executive bonuses are the focus of the major players until they’re not. And for all their similarities, Paramount Skydance and Warner Bros. Discovery are very different companies. In other words, what may be good for the goose here may be counterproductive for the gander. (And if the gander sees a pink slip in his or her future, believe me, they’re not super-concerned about the goose’s compensation.)
The good news is both Rayburn and Pastor believe Paramount+ and HBO Max to be “very good” (Rayburn’s words) digital platforms. And they’re only getting better as this soap opera, one that for a while looked like it would have a very different ending, drags on.
Paramount+ and HBO Max have both been “making aggressive plans and investments” to “better manage the user journey,” Pastor told THR.
And neither is packing up its content in surrender to the other’s stack.
“My guess is both parties are going to be trying to compete to showcase that they have the [better stack] for when that moment arrives,” Pastor said.
