Warner Bros. Discovery CFO Gunnar Wiedenfels recently told the Goldman Sachs Communacopia conference that “we’re not optimizing for subscribers.” He argued that metric reflects “the old world of streaming service evaluation” and is a “hollow” measure of success.
In the macro sense, he is right: his competition is pivoting away from the metric because investors no longer value it (meaning, more growth doesn’t merit the mythical “streaming multiple”, or Netflix’s price-to-earnings ratio). Amazon and Apple offer streaming via memberships, and Disney is now laying the groundwork for Disney+ as a foundation for membership perks within the Disney ecosystem.
But, it also reflects how Warner Bros. Discovery management is rejecting the aggressive pivot to a pure direct-to-consumer (DTC) model under its WarnerMedia predecessors—so aggressive that it rejected distribution via Prime Video Channels and The Roku Channel, which led to the months-long standoffs I wrote about in June. The new management team are rumored to be approaching Amazon and Roku to revive those deals, and has been unapologetically open in their efforts to reverse the previous management team’s direction.
Regardless of my opinions on the fundamentals of WBD’s strategy, I think Wiedenfels is making an important counterargument to Wall Street and at an important time.
Wiedenfels was answering this question from Goldman Sachs’ Brett Feldman:
Really, the biggest part of the revenue growth algorithm for the next few years is not going to be ARPU anyhow. It’s actually going to be subscriber growth. And you’ve established a ...