Warner Bros Discovery (WBD) expects its streaming profits to double this year, setting an ambitious target of at least 150 million subscribers by 2026. The optimistic forecast follows the global rollout of its Max streaming service and tight cost controls, positioning the company to compete with industry giants Netflix and Disney+.
Bold Streaming Targets and Subscriber Growth
WBD’s confidence in its streaming business comes from the rapid global expansion of Max and Discovery+, coupled with a robust content lineup that includes hits like “Dune: Prophecy.” The company added 6.4 million streaming subscribers in the fourth quarter, surpassing analyst expectations of 4.9 million, according to Visible Alpha.
The company’s total subscriber base now stands at nearly 117 million, trailing Netflix’s 302 million and Disney+’s 124.6 million. However, WBD is optimistic about its growth prospects, forecasting at least 150 million subscribers by 2026, well ahead of market estimates of 135.8 million.
“Our global expansion still has significant runway as Max rolls out to over 40% of the addressable global market where it is not yet available,” WBD stated in its letter to shareholders. The company expects adjusted profit margins of over 20% in its streaming business over time.
Max’s Global Expansion and Strategic Moves
WBD plans to bring Max to Australia at the end of March, followed by launches in Germany, Italy, and the UK next year. The streaming service was introduced in over 70 countries across Europe and Asia last year, contributing significantly to subscriber growth.
The company’s aggressive global rollout strategy is aimed at capitalizing on untapped markets, which WBD estimates to account for more than 40% of the global streaming market.
In December, WBD separated its cable TV businesses from its streaming and studio operations, paving the way for a potential sale or spinoff of its traditional TV assets. This strategic split allows WBD to focus on its digital streaming growth while exploring “broader market opportunities,” according to CEO David Zaslav.
Financial Performance and Profit Outlook
Despite posting a surprise loss in the fourth quarter due to declining traditional TV revenues and weaker ad sales, WBD’s streaming unit reported strong growth. The unit’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose to $409 million, beating expectations of $289.1 million, according to data from LSEG.
Overall, the streaming division’s revenue increased by 5%, reflecting continued demand for Max’s content offerings. WBD forecasts adjusted EBITDA of about $1.3 billion for its streaming business in 2025, nearly doubling from $677 million last year.
WBD’s total revenue for the quarter was $10.03 billion, slightly below Wall Street estimates of $10.19 billion. The company reported a loss of 20 cents per share, compared to analysts’ expectations of a 1 cent profit.
Challenges in Traditional TV and Studio Success
While streaming profits soared, WBD’s traditional TV networks segment, which includes CNN, Discovery Channel, and Animal Planet, saw a 5% decline in revenue. Advertising sales fell by 17% as marketers continued to pull back from cable TV.
In contrast, WBD’s studios division posted a 15% increase in revenue, benefiting from higher content licensing fees and the resolution of 2023’s Hollywood strikes by writers and actors.
The company’s decision to separate its TV business from streaming and studios reflects a strategic shift towards digital growth and profitability, even as traditional TV faces headwinds from declining viewership and ad revenues.
Market Reaction and Investor Confidence
Shares of WBD rose more than 10% in early trading on Thursday as investors welcomed the company’s bold streaming targets and strategic focus on profitability. Despite the quarterly loss, the market responded positively to WBD’s growth strategy and cost management initiatives.
WBD’s focus on global expansion, cost control, and strategic separation of its TV business has positioned the company to capture market share in the competitive streaming landscape.
Streaming Growth Amid Industry Challenges
Warner Bros Discovery’s ambitious streaming targets and strategic restructuring underscore its commitment to digital growth and profitability. By focusing on Max’s global expansion and leveraging a strong content lineup, WBD aims to double its streaming profits and compete with industry leaders.
As WBD navigates challenges in traditional TV and adapts to changing viewer habits, its success will depend on sustaining subscriber growth and optimizing its digital strategy. Investors are closely watching WBD’s progress as the company strives to achieve its bold 2026 subscriber target and maximize streaming profitability.
