1. Maxcovery+ Is Rising

Now that the Discovery-Warner deal is done the next step is the merger of the HBO Max and Discovery+ apps. 

This will be a very interesting marriage to watch as there is not a whole lot of audience overlap —”less than half” was the somewhat imprecise figure CEO Dave Zaslav put out there in a November earnings call, though that is not necessarily a bad thing.

Why It Matters

There are still a host of unanswered questions about this part of the merger, starting with how many subscribers HBO Max actually has.

This is a tricky stat, as anyone who subscribes to HBO via their MVPD got an automatic HBO Max subscription, and while many of them may have activated it, it’s still unclear as to how many primarily watch HBO via the Max app (if they watch via the Max app at all) versus watching via their MVPD.

So there’s that and then there’s the big pricing question.

Right now, ad-free HBO Max (which they should totally call HBO Max AF) is $15/month making it more expensive than any other Flix. 

Discovery+ AF, OTOH, is just $7/month without ads.

So how to combine them?

Will they raise the price even more? That would seem likely to scare off all those Discovery+ fans.

Keep the price the same? A win for Max AFers but still more than double what Discoveryites were paying.

Do they grandfather in existing Discovery subscribers at the $7 price point, a la CNN+ and their $2.99-for-life deal? That seems wise from a consumer POV, though I have no idea how much money they would be losing (if any) were they to do so. 

There’s also the final option—lowering the price. Again, great for consumers, great PR, but no idea how it might impact the bottom line.

Okay, I take that back—there is one more option: lower the price on the ad-supported app but keep it at $15 or even raise it on the ad-free version. This would drive more people to the ad-supported app which would give Warner-Discovery a much bigger base for its advertising, something that is going to be an issue for all of the subscription AVOD services as long as churn remains an issue. (And it will remain an issue, at least for the foreseeable future.)

Then there’s what to do with CNN+.

Given the new app’s disappointing start (more on that in a minute) does it just make sense to fold it into the Maxvocery app as an add-on, or will CNN’s new leadership want to try and rework the current formula while continuing to keep it separate?

My guess is that current CNN carriage deals will play an outsized role in any decision, but that folding it into Maxcovery+ would make a world of sense. And if there’s a decision to keep pricing high on Maxcovery+ AF, then throwing in CNN+ for no additional cost could make that seem like a much better deal.

What You Need To Do About It

If you’re the new Discovery-Warner management, then your interface and content discovery/recommendation systems are going to play huge roles in making the new app a success, getting each side to sample the other’s programming. It seems you have just upgraded your tech stack on the app, so remember to make recommendations a priority.

And resist the urge to do a crossover show where recovering coke addicts Drew and Jonathan Scott undergo a darkly humorous existential crisis as they try to walk away from the deal that has them using their home renovation business as a money laundering operation.

2. CNN+ Is Sinking

CNN+ is putting up some dismal numbers its first month, with reports that fewer than 10,000 people per day are watching the newly launched news app.

How much of that is due to limited distribution and how much is due to nobody really wanting a dedicated CNN app is anyone’s guess. 

But with the Discovery-Warner deal now finalized and a new management team in place, decisions will have to be made.

Why It Matters

It would be easy to blame CNN+’s failure to launch on the lack of distribution—while a deal has now been reached with Roku, the only TV-based platforms the app launched on were Amazon and Apple TV.

There’s a more existential question here though: does anyone really want a streaming news channel in 2022?

I mean yes, there are times, like the initial Russian invasion of Ukraine, where we all want to turn on the TV to see what’s happening. But beyond that, how many people—or how many people who prefer streaming to linear—are getting their news from TV.

Because one takeaway from the the events of the past year or so is that the traditional print news media—the New York Times, Washington Post and Wall Street Journal in particular—have all done a great job of keeping us on top of the news, updating and analyzing on a more or less constant basis during times of trouble.

There’s also CNN’s own website, which in addition to allowing for a quick free bite from the live cable TV feed, also does a great job of keeping viewers abreast.

Granted much of what is on CNN+ is lifestyle programming rather than actual news, but again, how much of an audience is there for that on streaming? Or at least an audience that’s willing to download and subscribe to a separate app to watch it.

All of which brings me to the point above: it seems like it would make far more sense to include CNN+ in the Maxcovery+ package where it becomes yet another type of viewing, not the only type of viewing.

And here’s a really radical thought: maybe license CNN+ to other Flixes as an add on news service for their app.

That would require an admission that there will not be a single winner in the streaming wars and that most people will likely have several services.

The downside is that it makes Maxcovery+ less unique, the upside is that it makes CNN+ more ubiquitous.

There would be much that would need to be ironed out: rights issues, who gets what data, are there ads and if so, how do the finances on that work. 

But someone’s got to be the dominant news organization of the streaming era, so why not CNN+?

What You Need To Do About It

If you’re CNN’s new management, better not to jump into anything. See what having the app on Roku does to your subscriber numbers. Get your PR team out there to try and change the narrative—you’re not the first app that’s taken a hit the first few months. And then, once you see where that’s all wound up, you can figure out what makes sense.

If you’re the New York Times, the door is wide open. You’ve got a whole stable of podcasts, starting with The Daily, that are immensely popular. Not to mention a whole lot of popular lifestyle content. So why not launch a similar type of streaming app and/or offer your programming as an add-on. Something to think about. 

Ditto Axios—your HBO show was solid, your podcast game is good, you appeal to a younger audience, you’re rolling out all those local editions. Seems like it could be a smart move for you too.