discovery+ reveal avoids projected subscribers, AT&T’s HBO Max and Disney’s Hulu avoids mentioning numbers for record viewerships

parqor discovery+

I spent three hours watching the Discovery presentation of discovery+. I think this tweet sums it up best.

No one seemed on top of their A-game in explaining the business rationale for the service to investors, nor did the financial projections give much confidence in the strategy. Back in September I wrote about Discovery’s “Difficult Road Ahead in Streaming” (for Members Only). I argued Discovery faces two key questions

  1. What territory can Discovery defend in streaming once it repurposes TV content for a digital medium?
  2. As I asked on Twitter, is Discovery talent better off monetizing their talent on a Discovery SVOD? Or monetizing their own audiences via Patreon or “on Instagram, YouTube and maybe even TikTok”?

Yesterday’s presentation did not answer either question, and in fact invited more doubt, as Vox Media’s Peter Kafka succinctly summed up:

But I was especially surprised to see Curse of the Mogul type-math emerge in this slide:

PARQOR discovery TAM slide
This slide says one thing convincingly: Discovery has built extraordinary global reach. But, they are selling a streaming business, and the implicit point they are making here is that the 470MM in the global Serviceable Addressable Market are likely discovery+ streaming subscribers, without diving into:

  1. why these TV viewers will convert to streaming, and
  2. the “Significant Mobile Opportunity in Many International Markets”

Instead, as the both the discovery+ presentation and investor Q&A made clear, they are arguing that the intangibles of Discovery talent will drive streaming conversions and therefore streaming scale.

To remind everyone, The Curse of the Mogul argues “CEOs believe the media industry involves managing creative talent and artistic product”, and therefore the media industry “is not subject to appraisal using traditional strategic, financial or management metrics.” For this reason, the “curse” ends up being for shareholders, who often see content creators reap greater returns than they do.

Shareholders can’t be happy with discovery+ relying so heavily on creative talent, and those who subscribe to the Curse of the Mogul especially will not be happy. One has to wonder for how much longer creative talent will be happy, too.

HBO Max and Hulu (!) Show Symptoms of the Curse, too

I have used the The Curse of the Mogul framework because it has helped to highlight the flaws in legacy media attempts in streaming, and also in bets tech companies like Apple TV+ and even audio streaming company Spotify have made.

I thought HBO Max was showing symptoms of the Curse of the Mogul back in June, in a comparison with Apple TV+:

First, the open question is whether the intangible, qualitative judgment of an “impressive” library will translate into more subscribers for HBO Max. There is an emerging, skeptical sense that the value proposition of HBO Max is too complex and confusing, and therefore “HBO Max’s launch has thus far been notably less smooth than the launch of Disney+”, according to one analyst.

In particular, HBO Max was able to launch with the entire Harry Potter library (presumably a last-minute deal that may or may not be tied to Peacock’s distribution across AT&T properties), but even that has not seemed to make a difference in solving for customer confusion at HBO’s success at launch. For some unhappy investors, this confusion means that not only does the intangible of a content library not solve for customer confusion, but customer confusion may become endemic enough that “management will have to react swiftly to limit further damage to the brand and prevent its loyal HBO customers from leaving the service altogether”.

Both HBO Max and Apple TV+ seem to be stuck in Curse of the Mogul type spending patterns, delivering billions of dollars (!) to content owners for streaming rights, while management from both companies is failing to prove to shareholders that they also understand both how users engage with their platforms, and what their users need from a streaming service. Apple TV+’s answer (Hollywood stars plus select legacy movies and series not currently on platforms) is disappointing to users and shareholders, alike. So, for what it is worth, I think Apple is more guilty of Curse of the Mogul than HBO Max (which, as I argued in a blog post, has made some smart adjustments to the service).

HBO Max is interesting because it has focused so heavily on both the quantity and intangible qualities of the WarnerMedia library that it may offer AT&T wireless subscribers more value than existing HBO subscribers. Which is a bizarre thought, but yet a completely reasonable conclusion to reach based on all available evidence, to date.

So it was notable that six months later, HBO Max PR tweeted this out:

The upside for HBO Max is that it has a good story about growth in its Q3 earnings, and now it has a good story about engagement across HBO and HBO Max. The downside is, without a two-minute standard like Netflix’s (which, I think is actually better than any other metrics out there) we have no sense of how The Undoing and Max Original did on HBO Max alone, which has nearly 8MM subscribers. In fact, unless The Undoing shows up in Nielsen’s streaming numbers one month from now (unlikely), we don’t know anything about how series and movies are performing on HBO Max (Brandon Katz of Observer has a good piece on just how obtuse HBO subscriber numbers have become).

Maybe we can give HBO Max a break because the service is three months old. But can we give the same break to Disney-owned Hulu, which reported its numbers in a similar way for Happiest Season, the the first holiday romantic comedy about a same-sex couple from a major Hollywood studio?

Variety has learned exclusively from Hulu that “Happiest Season” broke premiere records for the streamer. Over the long Thanksgiving weekend, the movie had the best viewership for any original film on the service in its opening weekend, and attracted more new subscribers than any other previous feature title.

Again, no numbers, nor do we know the record it broke. All we know is a bet on marquee Hollywood talent (Twlight‘s Kristen Stewart and Terminator: Dark Fate‘s Mackenzie Davis) led to previously unknown premiere records for Hulu being broken.

At a moment when streaming seems positioned to break the Curse of the Mogul, the Curse seems primed to undermine shareholders while rewarding creative talent, again.

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