Stefanie Smith | CNBC
Warner Bros. Discovery‘s HBO Max is removing 36 movies and TV series from its platform. There are three main reasons why it’s happening.
The films and series − which include 20 original HBO Max shows such as teen drama “Generation,” and “Sesame Street” spinoff “The Not-Too-Late Show with Elmo” − will be removed by end of Friday. The decision comes ahead of Warner Bros. Discovery plans to combine Discovery+ with HBO Max into a new service that will launch in the U.S. in mid-2023.
“As we work toward bringing our content catalogs under one platform, we will be making changes to the content offering available on both HBO Max and Discovery+. That will include the removal of some content from both platforms,” an HBO Max spokesman said in a statement.
It may seem strange for HBO Max to remove series it specifically made for the platform − streaming services are full of little-watched shows and movies. But for Warner Bros. Discovery, there are three main motivations behind the cuts: slashing costs, moving away from content aimed at kids and families and decluttering the service.
While HBO Max already paid for the production of these shows, it’s still on the hook for residuals, including so-called back-end payments to cast, crew and writers, based on long-term viewership metrics.
By removing these films and shows, especially the ones HBO Max created rather than licensed, executives can cut expenses immediately. Warner Bros. Discovery has promised at least $3 billion in synergies stemming from the merger of WarnerMedia and Discovery, announced in May.
The content eliminations in total will save “tens of millions of dollars,” according to two people familiar with the matter, who asked not to be named because the finances are private.
The reasoning isn’t the same as why superhero movie “Batgirl” was scrapped earlier this month. That decision took advantage of a change-of-strategy merger tax benefit that allowed for writing off incomplete projects. The HBO Max shows already launched and have been on the service, so they don’t apply for that benefit.
Warner Bros. can also potentially license the programming it has removed by selling it to another streaming provider, adding revenue by substracting content. That may give a second life to at least some of the shows and movies pulled from HBO Max.
Eschewing kids and family
Most of what HBO Max is pulling is either reality TV or kids and family content. (A full list of removed content is at the end of this story).
HBO Max will get its unscripted content from Discovery, which will add nearly its entire catalog of reality TV, including from HGTV, Food Network and Animal Plant, to the combined service next year. HBO Max laid off 14% of its staff earlier this week, including many from its unscripted division.
The move away from kids and family content is new. HBO Max executives decided viewers are simply not going to the service to watch kids programming. Even “Sesame Street,” which HBO Max acquired in 2019 in a five-year deal, isn’t pulling strong numbers, according to people familiar with the matter. That prompted the removal of “The Not-Too-Late Show with Elmo” and the removal of about 200 back episodes of the show, the people said.
HBO specializes in adult-themed content that skews toward a male audience. Discovery specializes in adult-themed reality content that is watched by more women. While the combined services hit both adult gender demographics, they don’t target kids. Instead of adding more content to fill that niche, Warner Bros. Discovery has decided to move away from the category with its future investment budget, said the people.
Streaming executives across the industry frequently talk of Netflix having a “discovery” problem. Netflix has so much content, they say, that it’s hard to search for its best stuff. While Netflix tries to mitigate this with algorithms and Top 10 lists, the service has hundreds of shows that get lost in the shuffle because there’s so much content gumming up the search process.
Everything getting pulled from “HBO Max” was infrequently watched, according to people familiar with the matter.
With the coming addition of Discovery+ content, Warner Bros. Discovery executives are concerned HBO Max may get bogged down with little-watched films and shows. That could cause viewers to associate the service with having a lot of stuff they don’t want to watch — the “Netflix problem,” said one HBO Max executive, who asked not to be named because the decision was private.
Traditional pay-TV has also struggled with the problem. Cable TV has ballooned in cost, averaging about $100 per month, while adding more and more poorly viewed cable networks over the years. The result is that customers have been rejecting cable TV in droves.
This risk of having too much content is one of the reasons Disney has historically kept Disney+, ESPN+ and Hulu separate. Disney executives have long felt consumers will pay a lower price for a more tailored experience.
Warner Bros. Discovery CEO David Zaslav may want to raise the price for a combined HBO Max-Discovery+ offering, especially as competitors Disney and Netflix have recently raised prices. Eliminating little watched content, while adding a slew of new Discovery + content, could help justify the increase.
HBO Max announced the following series will be removed this week:
12 Dates of Christmas
About Last Night
Aquaman: King of Atlantis
Ellen’s Next Great Designer
Elliott From Earth
Esme & Roy
Mao Mao, Heroes of Pure Heart
Messy Goes to Okido
Mia’s Magic Playground
My Dinner with Herve
My Mom, Your Dad
OK K.O.! – Let’s Be Heroes
The Ollie & Moon Show
Pac-Man and the Ghostly Adventures
Ravi Patel’s Pursuit of Happiness
Select Sesame Street Specials
Make It Big, Make It Small
Summer Camp Island
The Not-Too-Late Show with Elmo
The Runaway Bunny – Special
Tig n’ Seek
Victor and Valentino
Yabba Dabba Dinosaurs
WATCH: Warner Bros. Discovery CEO David Zaslav speaks to CNBC about his strategy