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Will this mega streaming stock cause trouble for Disney and Netflix?

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Discovery of Warner Bros. (WBD -3.91%) announced that it will merge its HBO Max and Discovery+ services into a new offering next summer. The company has yet to give a name to the unified streamer, but promises that it will combine the best of both platforms.

With this in mind, other entertainment companies waltz disney (SAY 2.33%) and netflix (NFLX 2.96%) could face serious competition.

Image source: Getty Images.

HBO Max has superheroes and mature content

When HBO Max launched in May 2020, the streamer had the advantage of having highly rated HBO shows such as The Sopranos, Veepand game of thrones to help her through the door. Since then, the service has continued to offer customers premium content with the likes of white lotus, Avenue 5and Peacemaker. And speaking of superhero content, HBO Max is now the streaming home for DC movies after wrapping their theatrical releases, so subscribers have access to movies like Joker and Wonder Woman 1984.

Disney+ has a sizable slate of superhero content with Loki, Ms. Marvel, and the many other Marvel movies and shows. But when it comes to more adult-oriented dramas, they have less to offer. Indeed, when Disney+ was announced in 2019, it focused on PG-13 and lower content. The company has since taken a more adult turn by adding the dead Pool deductible and Logan to Disney+, but it’s hard to imagine he’ll ever wear something like Thread Where Magic Mike XXL.

Netflix has plenty of mature programs such as the award-winning ozark and Peaky Blinders, but he struggled to make a name for himself with comic book material. The company recently launched a show based on the DC graphic novel Sand sellerand he took out the show Jupiter’s Legacybased on the superhero comics from Millarworld, last year – although Netflix canceled it after just one season.

Discovery+ has plenty of reality shows and documentaries

Netflix and Disney+ both offer customers a wide range of unscripted content. Netflix offers hundreds of documentaries and many reality TV shows. Disney+ viewers get access to National Geographic programming, and Hulu — which is available to Disney Bundle subscribers — offers a range of reality shows.

The Discovery brand built its name on unscripted content, so when Discovery+ launched in January 2021, the streamer was able to take advantage of an extensive back catalog. Indeed, Discovery+ promises subscribers access to 70,000 episodes, as well as hundreds of hours of exclusive programming.

But perhaps the most important detail in all of this is that, of Warner Bros. Discovery, only 24 million subscribe to Discovery+. When HBO Max and Discovery+ merge, tens of millions of homes will have access to all that extra unscripted content.

Skeptics might suggest that quality of content matters more than quantity, and that’s a reasonable argument. But since Warner Bros. Discovery will soon be giving subscribers some of their most beloved TV shows and movies alongside thousands of hours of unscripted programming, sure to make for a compelling offering.

Warner Bros. Discovery has yet to explain what HBO Max and Discovery+ will look like as a single platform, or what it will cost. HBO Max’s ad-free tier is $14.99 per month, while ad-free Discovery+ is $6.99 per month. However, if Warner Bros. Discovery is willing to take a haircut on the price and offer it at $20 a month, then it would be the same price as the Disney bundle and Netflix’s top tier, which would only add to the competition.

Tom Wilton has business dealings with Netflix, but has no financial position in the stocks mentioned. The Motley Fool holds positions and recommends Netflix and Walt Disney. The Motley Fool recommends Warner Bros. Discovery and recommends the following options: January 2024 long calls at $145 on Walt Disney and January 2024 short calls at $155 on Walt Disney. The Motley Fool has a disclosure policy.