Warner Bros. Discovery - DC Films 10 year plan and HBO Max restructuring

Q2 earnings call

held on Thursday, August 4, 2022, Warner Bros. Discovery CEO David Zaslav, responded to questions regarding the plans for DC Films. This was prompted by the bombshell decision to kill off the Batgirl HBO Max film.

Zaslav responded by confirming the DC Comics properties being brought to live action was a major factor in their long-term business strategy. According to the Warner Bros. Discovery head honcho: Our ambition is to bring Warners back and to produce great high quality films, and as we look at the opportunities that we have broadly, DC is one of the top of the list for us. You look at Batman, Superman, Wonder Woman, Aquaman — these are brands that are known everywhere in the world. The ability to drive those all over the world with great story is a big opportunity for us. CEO David Zaslav emphasized the importance of DC brands like Superman, Batman, Wonder Woman, and Aquaman.

David Zaslav continued by providing some insight as to what this entails for the DC Extended Universe: We have done a reset. We've restructured the business where we're going to focus. There will be a team with a ten-year plan focusing just on DC. It's very similar to the structure that Alan Horn and Bob Iger put together very effectively with Kevin Feige at Disney. It should be noted that Warner Bros. Discovery recently brought on board Alan Horn. Horn was the president and COO of Warner Bros. from 1999 to 2012. He then moved to Walt Disney Studios to serve as chairman and Chief Creative Officer from 2012 to 2020.

It was during Alan Horn's time in Warner Bros. that The Lord of the Rings, Harry Potter, and the Christopher Nolan Dark Knight films hit their stride. Likewise, Horn oversaw the production of the Marvel Studios content during its rise under Kevin Feige and the dominance of the Marvel Cinematic Universe. Focus on quality Zaslav further added that the new mandate for DC content going forward is an emphasis on quality: We think that we could build a long-term much stronger, sustainable growth business out of DC. And as part of that, we're going to focus on quality. We're not going to release any film before it's ready. We're not going to release a film to make a quarter. We're not going to release a film unless the focus is going to be, 'How do we make each of these films in general as good as possible?' The CEO concluded by mentioning specifically the upcoming slate of DCEU movies for the remainder of 2022 moving to 2023: But DC is something that we think we could make better and we're focused on it now. We have some great DC films coming up — Black Adam, Shazam, and Flash – and we're working on all of those. We're very excited about them. As this statement implies, the company will be focusing more on the big screen theatrical projects. However, it seems that it will not involve a full reboot. It is more likely that the company is turning its attention to making sure the quality of these upcoming films align with the new vision. And there are insider rumors that Shazam! Fury of the Gods and The Flash will be delayed further for possible reshoots. This would be in line with the surprise inclusion of Ben Affleck as Bruce Wayne/Batman in Aquaman and the Lost Kingdom.

Plus, based on the graphic provided during the Q2 earnings call, DC projects will have its own dedicated studio, along with Warner Bros., New Line Cinema, and WAG (Warner Bros. Animation Group). Although there is no official word yet on whether it will be named DC Studios, this is similar to how Marvel Studios was established under the Walt Disney Company to focus on the MCU and adjacent properties and projects.

CEO Zaslav concluded by reiterating the company's commitment to not just make the DC brand profitable, but also to protect it: The objective is to grow the DC brand, to grow the DC characters, but also, our job is to protect the DC brand and that's what we're gonna do. HBO Max and Discovery+ In a past report, it was detailed that a big part of the WarnerMedia and Discovery merger would entail big changes for their streaming services. Now, it has been confirmed that Discovery+ and HBO Max will be merged into one service, as well as potential options for a free but ad-supported service (similar to traditional free TV): Once our SVOD service is firmly established in the market, we see real potential and are exploring the opportunity for a fast or free ad-supported streaming offering that will give consumers who do not want to pay a subscription fee access to great library content, while at the same time serving as an entry point to our premium service. Part of this new strategy is the end of producing films specifically to go direct to streaming. As Zaslav states: We have a different view on releasing direct to streaming films and we have taken steps to course correct the previous strategy. This idea of expensive films going direct to streaming, we cannot find an economic case for it. We can't find an economic value for it. So we're making a strategic shift. We've been out in the town talking about our commitment to the theatrical exhibition and the theatrical window. However, Zaslav also addressed the concerns that HBO will reduce its original programming: We're going to spend significantly more on the HBO Max product. We're going to spend more money on content. We're a content company. Although there are no further details given, it is safe to assume that this will be on a case-by-case basis, depending on how successful and profitable the existing and future HBO projects are, such as the upcoming House of the Dragon.

Furthermore, the existing HBO Max service will add Discovery programming to its roster, such as those produced under the Magnolia Network. Meanwhile, Discovery+ will gain CNN Originals programming.

It is projected that the HBO Max and Discovery+ streaming services will complete its merged format in the U.S. by the summer of 2023, with other international territories some time in 2024.