HBO Max just broke streaming TV’s unwritten rule

Ever since Netflix debuted the likes of House of Cards and Orange is the New Black, streaming services have adhered to an unwritten rule: Their original series don’t go anywhere.

Licensed movies and shows, of course, get yanked from streaming services all the time. (See, for instance, NBCUniversal pulling The Office from Netflix onto Peacock.) But if a new show debuts on Netflix, Disney+, or Amazon Prime, you know it will remain on those services for years to come.

This week, however, Warner Bros. Discovery indicated that the rule no longer applies to HBO Max, as the company is pulling the once-buzzy drama Westworld from the service along with a few other original series. According to Variety, the move will allow Warner to avoid paying residuals to cast and crew, and is part of a broader effort by the company to turn a profit in streaming.

This could be just an isolated incident on Warner’s part. But with the entire streaming business becoming more cost-conscious, it might also be the start of a trend in which streaming catalogs become a lot less stable.

What’s happening to Westworld?

Westworld isn’t the first original show that Warner has pulled from HBO Max. Earlier this year, the company culled several other HBO shows from the service, including Vinyl, Camping, and Mrs. Fletcher. It also removed some of HBO Max’s direct-to-streaming movies and canceled several others that hadn’t debuted yet, most notably Batgirl.

Westworld is an especially high-profile example, though, and Warner might be pulling it for more than just tax write-off and residual reasons. Whereas those other shows have disappeared from the streaming realm entirely, Deadline’s Nellie Andreeva reports that Westworld is likely to land on a forthcoming free, ad-supported streaming service from Warner. Same goes for The Nevers, another original drama that Warner is removing from HBO Max.

In other words, pulling Westworld is at least partly about extracting more revenue from a show that may not have been driving enough HBO Max subscriptions. If prospective Westworld watchers don’t cancel, but do spend time watching the show on an ad-supported service, that makes it more profitable than it would have been on HBO Max alone.

Ad-supported streaming isn’t the only way in which Warner is looking to monetize its catalog outside of HBO Max. The company has discussed bringing new DC Comics-branded content to platforms other than HBO Max, such as Amazon, and executives have discussed “a more balanced approach to external licensing,” which had largely ceased under Warner’s previous leadership.

All of which suggests that the old model of hoarding original shows on HBO Max is going away. If a show isn’t performing like it used to, Warner may have no qualms about shopping it around.

Will more streaming services pull their originals?

We’re getting further into speculation territory here, but as media companies face pressure to make their streaming businesses profitable, I suspect Warner won’t be alone in loosening its grip on original programming.

Paramount has already taken some criticism from analysts this year for moving away from an “arms dealer” strategy and shifting more content onto Paramount+. In the entertainment industry, an “arms dealer” produces original movies and TV shows and sells the rights to that content to the highest bidder, rather than monetizing it through theatrical releases or its own online service. In a note to investors, Wells Fargo analyst Steven Cahall wrote that Paramount+ will never scale up enough to be solidly profitable, and that the company would make more money by selling more of its content to other distributors.

Meanwhile, Sony has boasted of its own success as a streaming “arms dealer.” The company sold its stake in the streaming service Crackle several years ago, and Sony has remained solidly profitable by selling its movies and shows to the highest bidders.

The money to be made on licensing must look somewhat attractive to companies like Netflix and Amazon and their legacy media competitors. These companies have spent billions of dollars building up vast original content catalogs over the years, and a 2020 report from a former streaming executive concluded that Netflix would come out ahead by licensing some of that older content, even if it lost some subscribers along the way.

While such a strategy might have seemed blasphemous a few years ago, when every streamer was chasing growth at all costs, streaming TV has since entered a bean-counting era, in which companies are scrounging wherever they can for profitability. Compared to price hikes and password-sharing crackdowns, licensing older original programming seems like a less risky way to make some money back.

What’s it mean for you?

Unless (or until) we see companies like Netflix and Amazon announce major licensing deals for older content, I wouldn’t worry too much about any of this. But Warner’s latest moves underscore the need for better universal streaming guides, so we can more easily find shows as they move between services. It’s also worth being aware of such tools as PlayOn and Channels DVR; they can help you maintain access to movies or shows even after they get pulled from the streaming services you subscribe to.

And of course, be prepared for a fresh round of gripes from cord-cutting naysayers if more licensing becomes the norm. They howled when companies started hoarding content on their own streaming services, so we should fully expect them to howl again if said content starts propagating back out.

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