1.  Discovery+ and HBO Max Are Merging

And then there were eight.

Flixes, that is.

Speaking at the Deutsche Bank Annual Media, Internet & Telecom investor event earlier this week, Discovery CFO Gunnar Wiedenfels let slip that the newly merged conglomerate’s two services were about to become one.

It was a move that took most of the industry by surprise, as the assumption was that Discovery would create a Disney-like bundle out of the two services and CNN+

But clearly not.

Why It Matters

The aforementioned assumption was based on the fact that Discovery+ and HBO Max have very little audience overlap, and that the people subscribing to the $7/month Discovery+ would not want to pay $15/month (or more) for HBO Max, nor would Max fans want to pay for Discovery.

And that’s before you throw in CNN+ which may or may not be part of the bundle.

The reality is though, that we’re all just guessing at the new service’s pricing and it may be that existing Discovery+ subscribers are grandfathered into the new service for life at their existing price point, so long as they keep the subscription current.

(Unlikely, but never say never, given CNN+’s $2.99-for-life plan.)

As ranted about on here numerous times in the past, Discovery+ may not be sexy, but it’s probably the most solid of the Flixes because it has programming that no one else has. 

What’s more, it has programming that no one else has even been able to replicate.

Say what you will about House Hunters, Property Brothers, Cupcake Wars and the like, but no one’s been able to roll out anything similar. Not even Netflix and Marie Kondo.

Those shows are all evergreen too, which is good because some of them have thousands of episodes. (This is not my usual exaggeration for effect either. House Hunters, for example, has been on the air since 1999 and is into its 206th season.) Meaning they are great for massive binge watching.

HBO, OTOH, is a completely different experience, filled with high profile shows with 12 episode seasons, shows you most definitely do not have on as background noise.

Which is perhaps the point.

If you can watch everything from nature documentaries to home remodeling shows to basketball games to dark comedies with conflicted unlikable antiheroes and (possibly) a national news channel all in the same place, then maybe you don’t really need any other streaming services. Or a confusing matrix of bundle options.

It’s a theory and it may turn out to be a good one.

Right now we don’t know enough details to make a call on this, so let me get back to you when we know the price, the availability of CNN+ and what discounts (if any) you get for a full year’s subscription.

What You Need To Do About It

If you’re Discovery-Warner, communication is going to be key here—make sure you let consumers know what you are up to and why and what the rationale behind all your decisions might be. Especially if it involves a price increase.

Then you’ll need to market the hell out of the new service, playing up the fact that it is probably the only streaming service you’ll need and paying special attention to what Disney is up to in terms of countermarketing.

Also consider setting up your own FAST, for all the reasons listed out here. Everyone else will be shifting to a three-tier model (SVOD-AVOD-FAST) and I suspect that all that HGTV, Food Network and Discovery programming will be gold on a FAST, given that it is both evergreen and bingeable and makes for excellent background TV.

If you’re Netflix, hope that Maxcovery+ goes for above $20, so you can stop at $19 and look like heroes.

If you’re the NBA, let Discovery Warner show TNT games on the new app. I know there are all sorts of crazy complicated rights deals, but in the long run, you’ll benefit from reaching that younger fan base.

2. Netflix Squeezes Latin American Password Sharers

Netflix has been struggling to grow its subscriber base in countries outside of North America and Europe, places where even a $10/month streaming subscription is beyond the reach of much of the population. 

That’s why it is curious to see that they are testing out a crackdown on password sharing in three Latin American countries—Chile, Peru and Costa Rica. Especially given that HBO Max has a very well-priced plan ($3-$6/month) in the region.

Why It Matters

Much of the planet is not subscription friendly. Meaning few people actually have the sort of disposable income required to pay for a subscription pay TV service. 

While countries like Chile, Peru and Costa Rica all have a sizable middle class, they are nowhere near the level of places like the U.S., Canada or Germany. 

Which is why it is so odd that Netflix is testing out the plan in these markets.

What happens, as per Ben Munson in Fierce Video, is that users will be prompted to add “personalized” accounts for people they don’t live with, said accounts costing an extra $3/month or so.

This seems particularly punitive, given that Netflix already has safeguards in place to prevent rampant password sharing: the standard plan only allows for two concurrent streams and the premium stream allows for four. So it’s not like you’d have dozens of people all sharing the same password anyway.

That said, password sharing is most definitely a thing, especially in the U.S. 

According to a LendingTree survey cited by Variety, 72% of U.S. Netflix subscribers reported sharing their password, a number that is only likely to remain stable or grow as consumers try and reign in their monthly streaming outlays.

That, and as Reed Hastings himself has noted, it’s a blurry line—many people feel that sharing an account with elderly parents or adult children is legit, especially given that Netflix actually limits the number of concurrent streams. 

What You Need To Do About It

If you’re Netflix, just roll with it. Cracking down like that is only going to piss people off and drive them to another service. You no longer have the monopoly you once did and other services are all spending billions developing programming that looks a lot like yours. You already have a good control in place with the number of concurrent streams. Push things, and you will seem both greedy and consumer-unfriendly at a time you can least afford it…especially in places where paying for Netflix can be a stretch.

If you’re HBO MAX et al, this seems like a great marketing opportunity—promote the fact that your subscription buys X number of concurrent streams, and you decide who you want to share them with. (You should also, of course, point out how much cheaper you are than Netflix.)

If you’re a consumer in one of those countries, don’t take the bait. They’re just putting it out there to see if anyone does.