Warner Bros. Discovery Joins the (very small) Profitable Streaming Club

Seven big questions re: WarnerBros. Discovery:
1) How much revenue is WarnerBros. Discovery generating from direct-to-consumer?
2) How many subscribers do they have?
3) Where is the subscriber growth coming from?
4) How much revenue do they make from each subscriber?
5) What share of revenue does advertising account for?
6) What share of total TV time does HBO Max account for?
7) How much does WarnerBros. Discovery spend on content?

Big question #1: How much revenue is WarnerBros. Discovery generating from direct-to-consumer?

WarnerBros. Discovery direct-to-consumer revenue (YoY growth):
1) 2022-Q1 – $2.5B
2) 2022-Q3 – $2.5B (↓ 1%)

WarnerBros. Discovery direct-to-consumer profit (YoY growth):
1) 2022-Q1 – –$654M
2) 2023-Q1 – $50M (↑ $704M)

Big question #2: How many subscribers do they have?

WarnerBros. Discovery subscribers (YoY growth):
1) 2022-Q1 – 90.4M
2) 2022-Q3 – 97.6M (↑ 8%)

Big question #3: Where is the subscriber growth coming from?

WarnerBros. Discovery subscriber growth (% of total):
1) International – 800K (57%)
2) Domestic – 700K (43%)
3) Total – 1.5M 

WarnerBros. Discovery subscribers (% of total):
1) Domestic – 55.3M (57%)
2) International – 42.3M (43%)
3) Total – 97.6M

Big question #4: How much revenue do they make from each subscriber?

Monthly ARPU for WarnerBros. Discovery streaming service:
1) Domestic – $10.82
2) International – $3.48
3) Global – $7.46

Big question #5: What share of revenue does advertising account for?

Quick answer: 4% WarnerBros. Discovery streaming revenue breakdown:
1) Subscription – 88%
2) Other – 8%
3) Advertising – 4%

Quick math on the advertising model for HBO Max:
1) Ad minutes/hour – 3
2) 30s spots/hour – 6
3) CPM $ – ≈ $80
4) $/spot – $0.08
5) Ad revenue/hour – $0.48
6) ARPU > $15 @ 15 hours ($10.00 + $7.20 = $17.20)

Flashback: Will Advertisers Support An Ad-Supported HBO Max?

Big question #6: What share of total TV time does HBO Max account for?

Quick answer: HBO Max accounts for 1% of total TV time and 4% of streaming TV time.

Big question #7: How much does WarnerBros. Discovery spend on content?

Estimated U.S. content spend for WarnerBros. Discovery (YoY growth) according to Wells Fargo:
1) 2019 – $19.8B
2) 2020 – $18.0B (↓ 9%)
3) 2021 – $20.7B (↑ 15%)
4) 2022P – $22.4B (↑ 8%)
5) 2023P – $24.0B (↑ 7%)
6) 2024P – $25.2B (↑ 5%)
7) 2025P – $26.2B (↑ 4%)

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