Warner Bros Discovery’s JB Perrette warns that the global streaming market faces pain and consolidation over the next three to five years, but he says that the merged group has what it takes to be among the big five groups that pull through.
And, to win the war of attrition and consolidation, WBD may choose not to fight every battle.
Perrette, WBD’s CEO and president of global streaming and games, said that the company’s Max streaming product is to be rolled out in a largely pre-determined sequence, one that arrives in Latin America and Europe before arriving in parts of Asia. But, speaking on Wednesday at the APOS conference in Indonesia, Perrette said that in some markets Max may never happen, and that WBD may favor local partnerships instead.
“If we think we’re going to have success and profitability, if our market differentiation is viable enough to make a go of it and have a profitable business over a three-to-five year timeline [then we will launch Max.] If the answer is ‘no’ because the market has ARPUs that are just too low or it is way over-served by a ton of other players, who are spending on a ton of content and losing a ton of money, we may say this is not the right time,” said Perrette.
“If we think we can be successful based on the three metrics that we have [profitability, market share and scale] then, yes, great, we’ll go and figure out how best to tackle it. But if the answer is no, we don’t see a path, then we’ll find partnerships and other ways to go to market.”
Perrette dropped a heavy hint that India, already the battleground for a seething cluster of local and international streaming players, may be prime example of a market where Max would be a player too many.
Perrette’s tactical approach flows from a macro assessment that the streaming market has gone too far too fast and that WBD, in particular, needs to return to rationality and profitability.
“We went through a decade of great oversupply and great under-pricing and we are in a period of rationalization and embracing the aggregation [process] There’s structural aggregation and there’s rebundling,” said Perrette. “I think you’re working towards a world where, over the next five to 10 years, you’re going to end up with three to five feasible players, in addition local champions in individual markets.”
Despite the chastening outlook, Perrette declared himself “very optimistic” that WBD has the strategy and content to be among the players that make it through the current tightening phase. “We lost $2 billion last year. We are now profitable in the first half of this year,” he said.
“I have high confidence. The IP we that have – between HBO, the Warner studio, all the factual content from Discovery side, to the DC Universe, “Harry Potter” — that, at the end of the day, great stories and great IP is what wins the day. Our portfolio gives us an absolute entitlement to be in that last group.”
Local product partnerships may be on the horizon too. “One of the areas we’re very focused on is we have great IP, things like DC franchises, which historically has been very English-language dominant, but where we can open and bring characters from that universe and originate local IP with a partner in that market. We think it’s not just investment entirely ourselves, but there may be creative ways to partner with existing local players,” said Perrette.
