Warner Bros. Discovery continues to lose money despite success of ‘The Last of Us’ and ‘Hogwarts Legacy’

Warner Bros. Discovery (WBD) reported underwhelming Q4 results yesterday, revealing a net loss of another $2.1 billion, including $217 million from its streaming division. This is despite the company touting the success of its new original series "The Last of Us," which averaged over 15 million viewers, and the recently launched video game Hogwarts Legacy, which saw more than $850 million in retail sales in just two weeks.

The company just barely missed analysts' estimates of nearly $11.36 billion in revenue, earning $11 billion — a significant jump from $9.82 billion in Q3 2022. Also, the streaming segment increased by 6% in revenue at $2.45 billion, beating Wall Street forecasts of $2.39 billion.

Plus, the company failed to beat subscriber estimates, adding just 1.1 million subs across HBO, HBO Max and Discovery+, versus a predicted 1.6 million net additions, bringing the new total to 96.1 million. WBD also missed expectations last quarter, only gaining 2.8 million subscribers rather than the anticipated net add of 3.27 million. WBD is still behind streaming giant Netflix, which boasts 230 million global subscribers.

The new addition of HBO Max subscribers was mainly driven by the streaming service returning to Amazon Prime Video Channels, as well as the debuts of popular shows like "The Last of Us" and the second season of "The White Lotus,” which won 10 Emmys and two Golden Globe awards. The company recently announced that “The Last of Us” would get a second season.

However, HBO Max and Discovery+ have yet to become profitable for WBD — which puts it in the same boat as other media companies. Netflix, on the other hand, has turned a profit.

On the bright-ish side, WBD CEO David Zaslav told investors that the merger-related restructuring is finally complete. Over the past 10 months, the company has implemented layoffs along with many film and TV cancellations in order to reduce its mountain of debt.

“We took bold, decisive action over the last 10 months, and the bulk of our restructuring is behind us. We have full command and control of our business, and we are one company now. We have a fantastic leadership team moving us forward, everyone rowing in the same direction. And together, we are focused on making our businesses better and stronger,” Zaslav said during the earnings call. “Last year was a year of restructuring. 2023 will be a year of building.”

Speaking of the merger, Zaslav announced that the new HBO Max/Discovery+ streaming service would launch in the next few months. The company will reveal more details on April 12 during a special press event.

He also confirmed that Discovery+ would remain a standalone service for customers that want to keep paying the lower price of $4.99 per month. Meanwhile, HBO Max will still be combined with Discovery+ content. Last month, WBD raised the price of HBO Max's ad-free plan for the first time, increasing the cost from $14.99 to $15.99 per month.

Now that WBD is done with restructuring, it can focus on expanding its original content catalog. For instance, Zaslav revealed exciting news for “Lord of the Rings” fans, announcing that Warner Bros Studios struck a deal to make multiple movies based on the franchise.

The company will also "take full advantage" of its other IP, including “Superman,” “Batman” and “Harry Potter,” said Zaslav.

Recently, DC Studios co-chairmen James Gunn and Peter Safran shared the 10 upcoming movie and TV projects, such as “Superman: Legacy,” “The Batman – Part II,” “Supergirl: Woman of Tomorrow” and more.

"I believe that we have an overwhelming advantage in the marketplace with the IP that we own," Zaslav added. “We have the strongest hand in the industry, with the most complete portfolio of assets and globally renowned franchises, personalities and storytelling IP across sports, news, nonfiction and entertainment, in virtually every region of the globe and in every language.”

Titles coming this year are “Shazam! Fury of the Gods,” which will arrive in theaters on March 17; “The Flash,” which will debut this summer on June 16; and “Aquaman and the Lost Kingdom,” starring Jason Momoa, set to premiere on December 25. Other movies include the “Barbie” movie starring Margot Robbie and Ryan Gosling, “Dune: Part Two” and Timothée Chalamet in “Wonka.”

Yesterday, prior to the earnings call, HBO announced that it ordered a "IT" inspired Max original series called "Welcome to Derry," which will be a prequel to the 2017 "IT" film and "IT Chapter Two."