Warner Bros. Discovery Q1 2025: Streaming Growth Powers Forward While Linear TV Continues to Decline

On May 8 2025, Warner Bros. Discovery reported mixed Q1 performance — fueled by streaming subscriber growth, increased ad-supported revenue, and international expansion, offset by continued decline in traditional linear networks and content revenue.

📈 With 5.3 million new streaming subscribers added this quarter (reaching 122.3M total) and streaming revenues up 9%, WBD continues to transform into a digital-first entertainment company despite legacy business headwinds.

Scope and Snapshot 

WBD's business model is built around three pillars:

• Building a global streaming platform with compelling content.

• Maximizing value from legacy linear networks during transition.

• Creating premium content across theatrical, television, and gaming.

  
  

Q1 2025 Key Results:

• Global streaming subscribers: 122.3M (+5.3M QoQ)

• Streaming revenues: $2,656M (+9% ex-FX YoY)

• Streaming advertising revenue: (+35% ex-FX YoY)

• Global streaming ARPU: $7.11 (-9% ex-FX YoY)

• Linear Networks subscribers: (-9% YoY (domestic))

• Content revenues: (-27% YoY (-25% ex-FX)

  
  

Keypoint 1: International Markets Driving Subscriber Growth: 

Global streaming subscribers reached 122.3 million at the end of the quarter, with international subscribers increasing significantly from 59.8M to 64.6M, while domestic growth was modest (57.1M to 57.6M).

What to expect: International markets will continue to drive most of the subscriber growth, with increased investment in localized content to boost engagement and retention.

Why it matters: For subscription businesses, this highlights the importance of geographic expansion strategies in scaling a subscriber base. The split between domestic and international subscribers directly impacts overall revenue yield, as shown in the ARPU trends.

Keypoint 2: ARPU Pressure From Market Expansion and Ad-Tier Growth: 

Global streaming ARPU decreased 9% ex-FX to $7.11, driven by growth in lower-ARPU international markets and a 5% decrease in domestic ARPU to $11.15 due to broader wholesale distribution of Max Basic with Ads.

What to expect: ARPU will likely remain under pressure as ad-supported and international tiers grow. WBD may introduce new monetization features or premium bundles to stabilize ARPU.

Why it matters: This illustrates a key challenge for subscription businesses: balancing subscriber growth with per-user revenue. Understanding how product tier adoption, geographic mix, and wholesale partnerships affect ARPU is crucial for managing sustainable revenue growth.

Keypoint 3: Ad-Supported Streaming Becoming Major Revenue Driver: 

Streaming advertising revenue increased significantly, up 35% ex-FX, primarily driven by growth in ad-lite subscribers, while distribution revenue grew more modestly at 8% ex-FX.

What to expect: Ad-supported streaming will become a core revenue pillar. Expect more sophisticated targeting and dynamic ad formats to maximize value per ad-lite user.

Why it matters: The substantial growth in ad revenue demonstrates the increasing viability of hybrid subscription models. For digital publishers and subscription services, integrating advertising can drive revenue growth even as subscription pricing faces pressure.

Keypoint 4: Volatile Content Revenue Highlighting Subscription Stability: 

Total content revenues decreased 27% (25% ex-FX) compared to the prior year, primarily due to lower box office and home entertainment revenues, as well as no major games releases in Q1 2025 compared to Q1 2024.

What to expect: Volatile content revenue will persist due to the hit-driven nature of theatrical and game releases. WBD will likely spread out major releases more strategically to smooth revenue cycles.

Why it matters: This stark contrast between volatile project-based revenue and steadier subscription income illustrates why many businesses are prioritizing recurring revenue models. For subscription businesses, this reinforces the value of building predictable, consistent revenue streams that aren't dependent on individual blockbuster releases.

Keypoint 5: Content Investment and Cost Management: 

Costs of revenues decreased across segments, with Streaming down 4% ex-FX due to programming release timing and Studios down 29% ex-FX—significantly impacted by lower theatrical and games costs (down 41% ex-FX and 66% ex-FX respectively). Film and television content rights decreased from $19.1B to $18.8B on the balance sheet.

What to expect: Expect tighter controls and prioritization of scalable, evergreen content over risky blockbusters. More regional co-productions and AI-assisted production methods could be explored to reduce costs.

Why it matters: For content-driven subscription businesses, managing the level and timing of content investment is critical for attracting subscribers while maintaining financial health. The balance between content spending and subscription revenue growth determines the path to profitability.

Keypoint 6: Linear Networks' Accelerating Decline:

Traditional pay TV networks saw revenues decrease 7% (6% ex-FX), with domestic linear subscribers declining 9% and advertising revenue down 11% ex-FX due to an audience decline of 27%.

What to expect: Linear subscriber losses will accelerate, especially in domestic markets. Expect repackaging of linear content into digital-first offerings or FAST (Free Ad-supported Streaming TV) channels.

Why it matters: This clearly illustrates the ongoing decline of traditional distribution channels. For publishers with legacy revenue streams, this underscores the urgent need to successfully transition into digital, direct-to-consumer models to offset these declines.

Keypoint 7: Internal Content Licensing Strategy: 

Revenue eliminations between segments, particularly Streaming & Studios, increased to $765M from $449M in Q1 2024. This reflects a greater internal content licensing as part of a vertical integration.

What to expect: Internal licensing volumes will increase as WBD continues its vertical integration. Expect more sophisticated internal transfer pricing and profit-center accountability models.

Why it matters: For diversified media and subscription businesses, this highlights the importance of clearly tracking how content and value move between departments. Understanding these internal transactions is crucial for evaluating the true performance of each business segment before consolidation.

Keypoint 8: Strategic Shift from Third-Party to Internal Content Distribution:

Content revenue in Streaming decreased 7% ex-FX, primarily due to international Max launches. This resulted in lower third-party licensing, as content previously licensed externally is now held for WBD's own streaming platforms.

What to expect: WBD will continue prioritizing in-house exclusivity to retain control and differentiate Max. Third-party licensing will be used more selectively and tactically.

Why it matters: This highlights a key strategic decision for content owners and publishers: whether to prioritize licensing content to external platforms for immediate revenue or retain exclusivity to strengthen their own subscription offerings. WBD's choice indicates a focus on building long-term subscription value over short-term licensing income.

Keypoint 9: Timing of Content Release Impact on Financials:

The timing of content releases significantly impacted both costs and revenues across segments. Streaming costs decreased 4% ex-FX primarily due to programming release timing. Global Linear Networks’ costs decreased 2% ex-FX due to content timing, while content revenue increased 44% ex-FX due to the timing of third-party licensing deals.

What to expect: Content timing will be increasingly algorithm-driven to optimize revenue recognition and engagement. More content clustering around subscriber acquisition windows is likely.

Why it matters: For subscription businesses, managing the timing of content creation, acquisition, and release is crucial for controlling costs, driving engagement, and smoothing revenue streams. The strategic cadence of content deployment directly impacts both subscriber acquisition/retention and financial reporting.

Keypoint 10: Marketing Investment Patterns: 

Selling, general and administrative costs varied across segments, with Streaming SG&A up 4% ex-FX due to higher overhead costs (partially offset by timing of marketing), Linear Networks SG&A up 3% ex-FX driven by higher marketing costs, and Studios SG&A up 5% ex-FX due to higher overhead (partially offset by lower Games marketing with no new releases).

What to expect: Marketing will shift from large, release-based campaigns to always-on performance-driven models. Expect more AI personalization in customer acquisition and retention efforts.

Why it matters: Effective marketing spend management is essential for subscription growth and profitability. The report shows how marketing investment varies with platform launches, content releases, and business priorities – a crucial balance for any subscription business to master.

Keypoint 11: Digital Infrastructure Investment:

Capital expenditures increased to $251M from $195M in Q1 2024, with studio expansion impacting free cash flow. This represents ongoing investment in the infrastructure needed to support content creation and distribution.

What to expect: Capex will shift more toward cloud infrastructure and production technology over physical studios. WBD may also invest in virtual production and real-time rendering tools.

Why it matters: Scaling digital platforms often requires significant capital investment in technology and infrastructure. For publishers building or enhancing their content creation and digital delivery platforms, understanding the ongoing capex requirements is essential for long-term planning and financial forecasting.

Keypoint 12: Cash Flow and Working Capital Management: 

The balance sheet shows receivables decreased from $4.95B to $4.66B, while deferred revenues increased slightly from $1.57B to $1.60B, positively impacting operating cash flow through favorable working capital.

What to expect: Expect stronger cash management discipline and more bundled prepayment models. Subscription plans with annual billing and upfront licensing deals may become more common.

Why it matters: For subscription businesses, deferred revenue represents collected but unrecognized revenue – a key indicator of future earnings. Managing these working capital accounts effectively is vital for maintaining healthy cash flow and financial stability during business model transitions.

Keypoint 13: Impact of Linear Decline on Overall Advertising:

While streaming ad revenue grew significantly (+35% ex-FX) due to ad-lite subscribers, overall advertising revenue across the company decreased (8% ex-FX). This is largely due to domestic linear audience declines of 27%, severely impacting the Global Linear Networks segment.

What to expect: Traditional ad revenue will continue falling, forcing reinvestment into digital ad tech. Expect WBD to enhance programmatic ad capabilities within Max to offset linear declines.

Why it matters: For publications and subscription businesses, this shows that relying on traditional advertising methods is becoming increasingly difficult as audiences migrate to digital platforms. It underscores the need to focus on digital advertising strategies, including models tied to subscription offerings like ad-supported tiers.

Conclusion: 

WBD's Q1 results reveal a company in transition – successfully building digital subscription strength while managing the decline of legacy businesses. The growth in streaming subscribers (particularly internationally) and advertising revenue demonstrates the potential of hybrid subscription models, even as ARPU faces pressure and content costs require disciplined management.

For any subscription business navigating similar transformations, these results underscore several key strategies: geographical expansion for growth, hybrid monetization combining subscription and advertising, content investment discipline, and careful timing of releases to maximize engagement and financial performance.

The continued decline of linear TV revenues serves as a stark reminder that legacy business erosion often happens faster than expected, adding urgency to digital transformation efforts for all traditional media companies.

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