Max Expected to Raise Price as Warner Bros. Discovery Plans More Cost Cutting

Max is also set to see an as-yet-unknown number of layoffs.

By Russ Burlingame

Max, the Warner Bros. Discovery-owned streaming service, will reportedly be increasing its price as part of the company's ongoing effort to cut costs and reduce its overall debt load. In the time since Discovery took over Warner Bros. aggressive cuts have reduced the company's overall liabilities by about $10 billion -- but with a long way still to go and strained relationships with talent across Hollywood, the company has not benefited much from all that cost-cutting, with its stock at an all-time low. There's no word on how much the price hike would be, and Warner Bros. Discovery hasn't commented on the report.

Sources tell Bloomberg that the Max division in particular is being targeted with both employee cuts and price hikes, in the hopes of trying to generate about $1 billion in earnings next year. Currently, the lowest-priced ad-free plan from Max weighs in at $15.99.

"The company is focused on the long-term growth of the business overall, including Max, which has been a priority across WBD to expand the original content offerings for our streaming audiences including news originals from CNN, March Madness and NBA Finals from sports, local language content from international, and a new distribution deal with A24."

According to the report, the cuts are likely to come from advertising and technology -- presumably figured as two places that don't have huge impact on the day to day operation of the app as it exists now.

HBO Max, the precursor to Max, was created by former management, and was for a time the fastest-growing streaming platform in the U.S. While it's notoriously difficult to break even on a streaming service, Warner Bros. had a strong user base and high customer satisfaction on its side. Once Discovery took over, CEO David Zaslav decided to merge Discovery+ with HBO Max to form Max, and also targeted the streamer with some of the most dramatic cost-cutting measure of his time at the company, including the infamous cancellations of nearly-completed tentpole movies like Scoob!: Holiday Haunt and Batgirl. 

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Streaming services in general have significantly upset the economics of Hollywood. While they have made cable TV and physical media significantly less profitable, they themselves are prohibitively expensive to run. Netflix, the king of all streamers, took over a decade to finally become profitable -- and that was before the market was saturated with competition.

Warner Bros. is scheduled to report its first-quarter financial results on Thursday before U.S. markets open, and analysts are predicting a roughly 4% decline, per the Bloomberg report. That, and the looming threat of a huge increase in the cost of licensing NBA games, could come as a hard blow for Warner Bros. Discovery's cable networks.

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