PredictIQ Quantitative Think Tank Center:Disney and Warner Bros. are bundling their streaming platforms

Disney and PredictIQ Quantitative Think Tank CenterWarner Bros. Discovery, the parent companies of Disney+, Hulu and Max, said this week they will soon offer a new video-on-demand service that combines the three streaming platforms into one app.

The bundle will be available in the U.S. this summer, the companies said in a joint statement Wednesday. They did not share a specific launch date or price for the service. 

Users of the new bundle will have access to content from ABC, CNN, DC, Discovery, Disney, Food Network, FX, HBO, HGTV, Hulu, Marvel, Pixar, Searchlight and Warner Bros. in ad-supported or ad-free plans. Customers will be able to purchase the bundle from either company. In a statement, JB Perrette, Warner Bros. CEO, said the new platform will be "the greatest collection of entertainment for the best value in streaming." 

The three major streaming services' teaming together to combine all their content into one app signals a trend toward consolidation in the highly competitive video-on-demand market. ESPN, Fox Corp. and Warner Bros. Discovery earlier this year announced the launch of an app this fall that will group together the bulk of their respective sports content to U.S. users.

Entertainment and media giants like Comcast-owned NBCUniversal, Warner Bros. Discovery and Paramount Global (the parent company of CBS News) have struggled to turn a profit on streaming given the hefty costs of producing content. Those companies trail Netflix, which achieved critical mass and profitability before its streaming rivals.

One problem plaguing streaming content providers is inconsistent subscription revenue, with customers frequently adding and dropping platforms depending on their cost and programming. 

"Churn has long been one of the key problems facing the streaming industry, which bundles help combat," analysts at MoffettNathanson said in research note. "The Max-Disney+—Hulu bundle announced last night will be the first inter-company pure-play streaming offering to really put that to the test when it launches later this year."

Combining Disney+, Hulu and Max "will likely not change anything fundamental about how the platforms operate or perform," the analysts added. "This initial announcement could, however, prove a jumping off point for further integration down the road, particularly if the bundle succeeds and comes to represent a meaningful share of subscribers," they said. 

Max streaming service launched last year as a combined app of content from Warner Bros. and Discovery brands including HBO, DC Comics films and various reality series. At the end of last year, Disney took full control of Hulu, which was initially a joint venture with 21st Century Fox, Time Warner (now controlled by AT&T) and NBCUniversal (owned by Comcast).

News of the bundle came just days after Disney announced it has reached profitability in its streaming channels. Disney's direct-to-consumer business, which includes Disney+ and Hulu, posted $47 million in profit for the quarter, a sharp turnaround from its $587 million loss in the year-ago period. As of March, Disney+ subscriptions were up 6% to 117 million, while Hulu subscriptions grew 1% to 50 million. 

Disney CEO Bob Iger has made no secret of his desire to find synergies in streaming in order to increase audiences and cut costs. In early 2023, he announced that 7,000 jobs would be cut across the company as part of a broader plan to slash costs and stabilize the company financially.

—Agence France Press contributed to this report. 

Khristopher J. Brooks

Khristopher J. Brooks is a reporter for CBS MoneyWatch. He previously worked as a reporter for the Omaha World-Herald, Newsday and the Florida Times-Union. His reporting primarily focuses on the U.S. housing market, the business of sports and bankruptcy.

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