Warner Bros. Discovery marked streaming gains in Q2 alongside positive results for its studio segment thanks to theatrical releases. As it prepares for a spin-out of linear networks next year and more closely aligns content efforts across studios and streaming while leaning into a library of existing IP, the company has been keeping more of the so-called good stuff for itself by focusing content licensing internally versus to third parties.
The topic of content licensing came up during WBD’s second quarter earnings call Thursday, where CFO Gunnar Wiedenfels (who is taking the helm as CEO of the spun-out Discovery Global business) noted the practice of licensing to its own platforms has been in the works over the past three years, during which WBD’s “very significantly shifted the mix between external and internal content sales.”
It’s a move that has put near-term pressure on financial results, but that the company ultimately expects and is starting to see pay off.
“We have taken a short-term financial hit for some real value that’s going to flow though,” Wiedenfels added.
Part of the aim is to maintain and grow the HBO Max brand name and platform as synonymous with and the place to find premium, high-quality entertainment. To that end it also brought the HBO brand back into the name of its flagship SVOD in May, a strategy reversal from the Max moniker introduced in 2023.
Media companies and streamers keeping content exclusive to their platform (or licensed only to their own services) as part of the value prop to woo subscribers isn’t a new idea, particularly as new services launched and looked to build up customer bases. But as streamers became more established, linear continued decline and companies sought paths to profit, including through better monetization of library content, the practice of licensing to potential rivals became less taboo in recent times.
To be sure, WBD will continue to license and produce content for third parties. It has repeatedly said (and did so again in the Q2 letter to shareholders) that monetizing content, including first-run and older library content, “is a key strategic imperative for WBD,” and one that generates significant revenue.
To that point, per the letter, over the last five years, WBD’s film and TV libraries have generated on average roughly $5 billion in annual revenue, including through third-party and internal licensing to HBO Max.
That said, as internal stakeholders vet and make decisions on whether to license to third-parties or keep content for WBD’s internal use, the slant is now more heavily towards its own platforms.
WBD CEO David Zaslav on Thursday noted WBD has made calls on content licensing, including this year, “where we’ve opted to sell significantly less than we could into the streaming market, as well as the traditional market, because we’re seeing such growth,” including for the Studios business, which will be housed with streaming and HBO Max in the remaining Warner Bros. entity.
As mentioned, a No. 1 priority is to make the HBO Max brand known as the destination for high-quality content. And to do so, it needs some content that viewers can only find through its platform.
“We think in order to differentiate HBO Max it’s important that there are a wealth of quality properties that reinforce ‘you only get this at HBO Max’,” the CEO said.
The approach appears to be showing results.
“That’s working for us in terms of driving growth, it’s working for us as people more and more [are] seeing HBO Max as the premier quality service around the world,” Zaslav commented.
Still, as mentioned, the increased focus on internal content licensing is a longer-term strategy that puts pressure on the company’s near-term financial results.
In a Q2 letter to shareholders, WBD told investors the internal licensing approach weighs on results near-term because by doing so the gross profit from its Studios segment is initially eliminated. However, that profit flows back through the financials over time. And as WBD frames it, it’s all in support of a growth end game.
“Of course, this content contributes to the growth and sustainability of HBO Max and WBD overall, despite the necessary trade-off of lower near-term revenue, Adjusted EBITDA, and free cash flow generation,” wrote WBD in its letter to shareholders.
Similarly, on the earnings call, Wiedenfels noted that despite near-term pressure, “we have put a 10-digit figure of value in terms of intercompany profits parked on the balance sheet that’s going to come back into the P&L over the next few years as” leaders of its streaming operations utilize that content for HBO Max.
As Zaslav put it, “it’s really a decision to fight for asset value and growth rather than near term value,” adding “we did walk away, and I expect that we will continue to because we’re seeing very good trends as we grow around the world.”
They emphasized it as one of the key benefits of a more holistic and integrated approach between HBO Max and Warner Bros. Studios and its TV and film pipeline and library – a strategy the shareholder letter categorized as “one key driver of HBO Max’s success and consumer value proposition.”
“During the first half of 2025, content created by Warner Bros. Studios accounted for over half of global hours streamed on HBO Max, with almost all of our global viewing accounts having watched a WB-produced title,” the letter stated.
HBO Max had a strong content slate in Q2 including the conclusion of the first season of The Pitt and third season of The White Lotus, as well as the return of The Last of Us, among other titles.
International drives Q2 subscriber growth
And back to that international growth and licensing approach as it looks to build up bases, international markets drove streaming subscriber additions for HBO Max in Q2.
WBD added around 3.4 million streaming subscribers in the three-month period, with international subs accounting for 3.2 million of those adds. Specifically, international subs were boosted by the launch of HBO Max in Australia at the end of Q1, which included both retail direct-to-consumer and a wholesale partnership with Australian pay TV provider Foxtel.
WBD’s subscriber tally stands at 125.7 million, including 57.8 domestic and 67.9 international.
With upcoming HBO Max launches in Germany, Italy, the UK and Ireland set the first half of 2026, the company is confident in surpassing 150 million streaming subscribers by the end of 2026.
Streaming revenue in Q2 grew 9% yoy to reach $2.8 billion, including $2.7 billion in subscriber-related revenue. Content revenue of $102 million was down 17% yoy, mainly driven by the launch of HBO Max in new international markets that resulted in lower third-party licensing. Streaming improved profitability, generating $293 million in Adjusted EBITDA compared to a $107 million loss in Q2 2024. The company continues to expect at least $1.3 billion in streaming Adjusted EBITDA in 2025.
More studio and streaming cooperation
As its studios and streaming segment is set to become just Warner Bros. after the spin-out of its linear networks is completed next year, it is working to leverage underutilized, well-known IP and franchises alongside a more symbiotic operating and full-year programming strategy to content and windowing amongst the two operations.
HBO and Warner Bros. Television didn’t work that much together previously, Zaslav noted Thursday, but that is changing with teams now collaborating on efforts like The Pitt and tent-pole IP like a 10-year plan for the Harry Potter franchise.
He explained the idea of aligning TV production with streaming, with “more coordination going to HBO Max for a net value and a net positive that will drive sustainable growth at HBO Max,” while noting it will still continue work producing for others, like it did with Ted Lasso and Shrinking for Apple TV+.
Studios see Q2 growth
As for the studios, WBD had a strong Q2 with the segment generating $3.8 billion in revenue (up 55% yoy) on the back of theatrical releases of A Minecraft Movie, Sinners, and Final Destination: Bloodlines in the quarter, as well as distribution and marketing of F1.
Studios operating expenses were up 30% yoy to $2.9 billion. In Q2, the studios segment attributed higher intercompany content licensing as the primary driver a 115% bump in TV studios content revenue, but also the driver of an 87% increase in TV studio content expenses.
Studios generated $863 million in Adjusted EBITDA in Q2 and the segment is on track to deliver at least $2.4 billion in AEBITDA in 2025
Moving forward the company is targeting 12-14 theatrical releases per year across its four key operations, including Warner Bros. Pictures, DC Studios, New Line Cinema and Warner Bros. Animation.
Some of the plans revolve around “tentpole” or well-known Warner Bros. IP (such as Batman, Lord of The Rings, and Harry Potter). It’s also reviving the DC Universe, starting with this summer’s Superman release, which generated $220 million globally its opening weekend. DC has a slate of content installments including theatrical releases in 2026 and TV series – where studios and streaming cross-over is also happening, such as The Penguin, which was watched by nearly 20 million HBO Max subscribers. In addition to reviving under-used IP (Zaslav noted there was no new Superman content in 14 years or LOTR in 13 years), it’s also looking to tell new stories through studios like with Sinners.
“So we have a very balanced portfolio that's much more focused on the economics of each of these,” he said, adding “we’re really making the turn. It’s been three years of investment…and you’ll see them roll out strategically and with a real focus on cost.”
It’s also looking to offer a steadier cadence of content for subscribers as well.
JB Perette, CEO of Global Streaming and Games, noted a refined and more rigorous content strategy that’s focused on serving consumers with 52 weeks of programming, with “constantly iterating and better datasets to look at what’s working and what’s not working.”
One of the goals is to keep consumers engaged and reduce churn by eliminating gaps in fresh content over the course of the year.
“We're now getting to a rhythm where between [HBO CEO Casey Bloys’] slate, the theatrical slate, some third party acquisitions, we have a much more consistent, 52-week-a-year schedule, where we're doing a much better job of handing off consumers and subscribers from one set of content to other sets of content.”
He added that the HBO Max 2026 content slate looks stronger than 2025, and looking at early 2027, “the engine just keeps getting better.”
Asked about pricing, Perrette noted it’s trying to keep the HBO Max product affordable as it looks to grow and penetrate in new markets, but with an emphasis on premium content and prestige of the HBO brand, does think there’s “meaningful growth also coming from a price acceleration over the next couple of years.”
In September it will also start to be more aggressive in messaging around unauthorized HBO Max account sharing and prompting users to take action as WBD starts to more strongly enforce a crackdown on password sharing.
Streaming impact from restructured HBO Max distribution
The company did warn of impacts from a restructured U.S. HBO Max distribution deal, which had a modest negative hit on Q2 domestic ARPU and distribution revenues, but WBD expects “a more pronounced impact” in the second half, with distribution revenue growth forecast in the low, single-digit range beginning in Q3 and lingering into the first half of 2026. It expects a re-acceleration in global distribution revenue growth during 2026, thanks in part to the Q1 and Q2 international market launches.
As for the Global Linear networks segment that’s set to be spun out, total Q2 revenues of $4.8 billion were down 9% yoy, including decreases across distribution, advertising and content. Adjusted EBITDA declined 24% to $1.5 billion in the period.
WBD’s total Q2 revenues of $9.8 billion were up 1% yoy, including $4.4 billion in distribution (flat) $2.2 billion in advertising (down 9% yoy) and $2.5 billion in content (up 17% yoy). Q2 net income was $1.58 billion and Adjusted EBITDA grew 9% to $1.95 billion.