The merger in April of WarnerMedia and Discovery to form Warner Bros. Discovery (WBD 0.16%) led to a restructuring of HBO, where some executives left. But Warner CEO David Zaslav has officially extended HBO President Casey Bloys' contract by five years. Here's why that's positive news for HBO and HBO Max.
HBO has undergone significant changes, having had three separate owners in the past six years and also launched its streaming service HBO Max in May 2020. Through it all, Bloys has remained a vigilant guardian of the service, being its president for the last seven years. Zaslav's five-year extension of Bloys' contract is a vote of confidence in the executive whose efforts have led HBO and HBO Max to immense success.
Bloys oversaw the company's venture into the fiercely competitive streaming industry with the launch of HBO Max. HBO and HBO Max amassed 76.8 million subscribers by the first quarter of 2022, an increase of 12.8 million.
The streaming service grew to a 14% market share in the first quarter of 2022, up from 12% in the prior quarter. That moved HBO Max ahead of Walt Disney's (DIS 0.22%) Disney+ and Hulu into third place, behind leader Netflix (NFLX 2.51%) and Amazon's (AMZN 3.28%) Prime Video.
Moreover, the continued growth and success of HBO Max make Bloys the best candidate for its next phase: a merger with Discovery+. In March, Discovery confirmed its plans to combine HBO Max and Discovery+ into one platform. While the move has the potential to change HBO Max for the worse, Bloys' experience running HBO and HBO Max through major changes proves he is up for the task of retaining content quality and subscriber satisfaction through the merger.
A leader in quality
In addition to positive growth, Bloys has ensured HBO retained its signature quality content over the years. In the run-up to the launch of Warner Bros. Discovery, there were concerns that the quality of HBO would diminish under new leadership. But fans of HBO have experienced the same quality, if not higher, as the newly formed company found its footing -- a fact most apparent through the networks' latest Emmy nominations.
On July 12, the annual Emmy nominations were announced, including 140 for HBO and HBO Max -- and that's after 130 the previous year. Netflix earned 105 nominations, down from 129 in 2021. Even when taking HBO Max's nominations separately, it still beat out Netflix with 108. The two HBO services dominated the nominations with hit series such as Euphoria, White Lotus, and Succession, which have already drawn substantial viewership. Euphoria's second season launched in January and has become the second-most-watched series in HBO history, behind only Game of Thrones.
Furthermore, Bloys' emphasis on quality has led HBO Max to have the highest consumer satisfaction rate among all streaming services, according to market researcher Whip Media. From 2021 to 2022, HBO Max increased from 92% to 94% satisfaction while Disney+ stayed at 88%, and Netflix fell from 90% to 80%. HBO Max also beat out the competition, with its library of original and legacy series scoring higher than any other streamer.
Taking on the competition
As HBO Max expands further and streaming becomes a larger part of Warner Bros. Discovery's business, it will be crucial for the platform to retain its current growth rate. The service has already performed well against leader Netflix, stealing market share and increasing subscriber numbers. Netflix lost 970,000 subscribers in the second quarter of 2022, and if HBO Max continues to increase members in its second quarter, it will be on a trajectory to eventually overtake the service.
HBO Max is also releasing House of the Dragon, a Game of Thrones spinoff, in August. The original series continues to be the most-watched show in HBO history and the spinoff can potentially attract a massive audience. If the it can garner positive subscriber reviews, hype will only grow for the recently announced Jon Snow series in the works. August will also bring an influx of films from A24, the production company responsible for HBO's Euphoria.
In the coming weeks, investors will want to keep an eye on subscriber growth reports for HBO and HBO Max, as well as the performance of its future content.