Warner Media And Discovery Merge For A Powerful New Market Position

If you haven't heard yet, AT&T has decided to spin off its recently acquired Warner Media (HBO, CNN, Warner Bros.) to partner with Discovery. Their goal is to create a powerful new force in American entertainment, sports, reality TV, news, and streaming video, in order to compete with Disney and Netflix in the streaming wars.

I talk a lot about the importance of market positioning and this is a great example.

(It's important to note that market positioning and brand positioning are not the same. We will see brand positioning sometime in the future when we see how they decide to roll this new service out.)

This is my understanding of what is happening, please let me know your thoughts.

Disney has effectively captured 40% of the subscribers in the US with Netflix in second place with 28%. When Warner Media and Discovery combine their base, they will have 13%. This puts them in 3rd place and above ViacomCBS with 11% and Starz with 5%.

But what makes them think they can compete with Disney and Netflix to capture more subscribers? I mean, just because you are in 3rd place doesn't mean you can compete.

The answer is Capital. This is how much money each of them currently spends on content in relation to the other competitors. After the merger, WarnerMedia/Discovery will have enough capital to compete for the #2 spot.

  1. Disney - $25B

  2. Warner Media/Discovery - $20B

  3. NBCUniversal - $18B

  4. Netflix - $17B

  5. Viacom CBS - $15B

What can you as a small or micro business learn from this example?

You absolutely have to have goals to be successful in business, and you have to have the appropriate resources and market position strategy to achieve those goals. Oftentimes, business owners are setting audacious goals, but not doing the due diligence to consider if they can afford to go after those goals.

What is the result of this?

  • Lackluster performance.

  • Burnt out, team members.

  • Inability to see actual progress.

  • Undervaluing the contrarian voices that tried to reason with you.