Since the pandemic, the entertainment industry has gone through huge changes. All entertainment companies, including traditional giants like Warner Bros. Discovery, have had to do their best to adapt to these changes and challenges. From the rise of streaming platforms, changes in consumer preferences, the impact of the macroeconomy, traditional cinema distribution and TV networks have been deeply affected. Warner Bros. Discovery has taken several bold actions to survive, but whether these efforts will succeed is still unknown.
Challenges in the New Entertainment Landscape
One of the biggest challenges Warner Bros. Discovery faces is the rise of streaming platforms. Streaming giants like Netflix and Disney+ not only allocate the market, but they also forced Warner Bros. Discovery to rethink its HBO Max (now renamed Max). Competing with these giants requires continuous high-quality content, large investments in technology, and a deep understanding of audience data. At the same time, Warner Bros. Discovery's traditional reliance on cinema releases has also been severely hit by the pandemic. Although movies like The Batman and Dune: Part One were successful, overall viewership is still lower than before the pandemic. According to a report from 4 January 2024, global box office revenue in 2023 was about $33.9 billion, up 30.8% from $25.9 billion in 2022. However, this income has not yet recovered to the $42.5 billion level of 2019. In 2020, global box office revenue dropped to about $12 billion due to the pandemic, a 72% decrease from 2019. Another major factor affecting the industry has been macroeconomic issues like rising production costs and inflation, along with internal problems like strikes from the Writers Guild and Screen Actors Guild. These strikes led to delays in many film and TV productions thus reducing the number of Hollywood movies and shows. According to FilmLA, in the third quarter of 2023, the number of “scripted TV shows” produced in the Los Angeles area dropped by nearly 99%, while film production also dropped by 55%.
Warner Bros. Discovery's Response Strategy
To face these challenges, Warner Bros. Discovery has taken several actions:
Streaming Transformation and Rebranding
Renaming HBO Max to Max in May 2023 was a key step for Warner Bros. Discovery to better integrate its content and attract a wider audience. With the success of shows like House of the Dragon and The Last of Us, Warner Bros. Discovery has further leveraged its intellectual property (IP) to compete in the streaming war.
Maximising Franchise and Intellectual Property (IP) Development
Warner Bros. Discovery continues to focus on big franchises like Harry Potter, the DC Universe, and Game of Thrones. For example, on 1 January 2025, Warner Bros. Discovery will be maximising the profits from the Harry Potter IP by collaborate with Starbucks in South Korea to launch a Hogwarts series of drinks and merchandise. This strategy not only boosts the revenue from this IP but also brings the Harry Potter franchise back into the public eye, playing on viewers’ nostalgia.
Cost Cutting and Organisational Restructuring
Under CEO David Zaslav, Warner Bros. Discovery has implemented a major restructuring plan that includes layoffs and reassessing production budgets. In late 2022, Warner Bros. Discovery announced large-scale layoffs, including for the HBO Max team and the film department to reduce costs. Regarding movie budgets, Warner Bros. Discovery even cancelled the completed Batgirl movie, signalling a preference for high-return investments. These measures aim to streamline operations and improve profitability, but they may lower employee morale and reduce creative talent. However, creativity is essential for long-term success.
Potential Risks and Future Outlook
While these strategies show how Warner Bros. Discovery ability to adapt, they also come with risks. The content integration in Max might weaken the brand’s uniqueness and even decreases loyal users. Also, relying too much on established franchises could limit innovation and fail to attract new generations of viewers. Moreover, macroeconomic factors like inflation and reduced consumer spending could further affect Warner Bros. Discovery's profitability. The company will need to balance cost-cutting with investing in original content to remain competitive in a fast-changing market.
Will Warner Bros. Discovery Succeed in Its Transformation or Just Barely Survive?
The success of Warner Bros. Discovery's adaptation strategy will depend on how well it can provide quality content while managing operational and market challenges. The company’s rich history and strong IP assets give it a solid foundation, but future success will still depend on innovation and flexibility. In a dynamic entertainment economy, Warner Bros. Discovery has shown resilience in the face of turbulence. Whether these efforts will be enough to maintain its industry leadership is still uncertain, but one thing is clear: survival requires bold action, and Warner Bros. Discovery is taking it.