Warner Bros. Discovery (WBD -2.17%) was formed from the merger of WarnerMedia and Discovery that closed about a year ago. At the time, the company's stock was trading around $25 apiece, but now shares are changing hands for less than $14.

One of Warner Bros. Discovery's biggest challenges over the past 12 months has been servicing its debt burden. The company has worked to cut costs and tighten operations, but it's still in the red by almost $50 billion. Nonetheless, that's not the whole story for Warner Bros. Discovery -- it has had some recent high spots, suggesting its fortunes may be changing. 

Success in gaming

As an entertainment company, Warner Bros. Discovery built and accrued a lot of intellectual property over the years. One of the most beloved brands under Warner Bros. Discovery's control is Harry Potter and its plethora of characters.

In February, Warner Bros. Discovery subsidiary Warner Bros. Games launched Hogwarts Legacy, an open-world video game that lets players explore the wizarding school made famous in the Harry Potter books and movies. The title has proven so successful that 12 million copies were sold within the first few weeks, generating $850 million revenue.

Warner Bros. Discovery CEO David Zaslav discussed the popularity of Hogwarts Legacy during the company's fiscal 2022 fourth-quarter earnings call, where he noted the title is due to launch on several more platforms over the coming months. Zaslav was also bullish on other hotly anticipated games that are on their way in 2023, including DC tie-in Suicide Squad: Kill the Justice League and Mortal Kombat 12.

Fresh streaming opportunities

Warner Bros. Discovery recently announced Max, a streaming service that will go live on May 23. The new platform will carry content previously found on HBO Max while also pulling in programming from Discovery+. (Discovery+ will continue to operate as a stand-alone service.)

During the Max launch event, Warner Bros. Discovery also revealed Max will be available in three tiers -- Max Ad Light ($9.99 a month), Max Ad Free ($15.99 a month), and Max Ultimate Ad Free ($19.99 a month). That last price point is a whole new offering from the company, and means Max will more directly compete with Walt Disney's high-end Disney Bundle ($19.99 a month), and Netflix's premium offering ($19.99 a month).

Going FAST

Warner Bros. Discovery is not just thinking about the top end of streaming -- it's also making a play for free ad-supported television (FAST).

On the Q4 earnings call, Zaslav shared plans for Warner Bros. Discovery to launch a FAST service later this year. The executive noted the company has a unique opportunity to exploit its vast library of TV and motion picture content: "[W]e can create a Tubi or a Pluto without buying content from anybody by just being able to put it on ourselves," Zaslav said.

From a business stance, moving into FAST makes a lot of sense; in January, Keith Valory, CEO of video service Plex, said FAST programming accounted for 30% of all programming on his company's platform in 2022 -- up from 6% in 2020. Indeed, some analysts anticipate FAST has a long way to go yet, with market revenue predicted to climb from $4 billion in 2022 to $9 billion by the end of 2026.

Is the debt too much?

When it comes to video games and streaming, Warner Bros. Discovery certainly has some strong prospects. But the question remains whether these efforts will be enough to alleviate the weight of its debt.

Stakeholders would do well to watch the company's upcoming quarterly earnings. If Hogwarts Legacy is still selling well and consumers are still signing up to its streaming offerings, then investors may be able to see beyond the $50 billion in debt.

On the other hand, if the company's results fall short of expectations, market watchers may question if Warner Bros. Discovery is the right stock for them.