Why will HBO Max remove so many series and movies?

(CNN Business) — When hbo max was launched in 2020, was designed to be the streaming home for all things Warner Bros., DC, HBO and with plenty for kids to watch too. Now all of a sudden, HBO Max is starting to look a little different.

The service, which like CNN is owned by Warner Bros. Discovery, has been ruling out tv shows and movies from left to right as you cut costs, change strategy, and prepare for merge next summer with Discovery+its sister streaming service.

So what is going on? The media landscape is decidedly different than it was in the early days of the pandemic, and HBO Max continues to change.

Why will HBO Max remove shows it owns or licenses?

There are a plethora of reasons why HBO Max will remove shows like “Generation,” “Infinity Train,” “Vinyl,” and “The Not-Too-Late Show with Elmo.”

But it breaks down into three key areas: cost reduction, a change in overall content strategy, and removal of content from the service that subscribers weren’t seeing.

Wait, cost cutting? HBO Max does not own this content?

Just because content lives on a service doesn’t mean it’s free after sunk costs.

Streaming services still have to pay residuals to a production’s actors and crews, and those costs add up. HBO Max will save “more than $100 million annually” after removing the shows, according to a source familiar with HBO’s decision.

Warner Bros. Discovery has told investors it will cut a total of $3 billion in costs in the company, so every little bit helps.

“Keeping titles on a platform comes at a cost,” Julia Alexander, chief strategy officer at Parrot Analytics, told CNN Business. “Does a title bring more value to the platform than its cost? If the answer is no, and especially if that title is a low engagement title, which is the case for many of them, then removing titles can benefit the bottom line of a business”.

But isn’t the goal of streaming to be “everything in our catalog”?

Streaming has taught consumers to believe that everything will be available forever on a service, especially original content. That is not always the case.

Other services also pull content from their libraries. It is a part of the business.

What does Warner Bros. Discovery have to say about it?

“As we work to bring our content catalogs together on a single platform, we will be making changes to the content offerings available on both HBO Max and Discovery+,” an HBO Max spokesperson told CNN Business. “That will include the removal of some content from both platforms.”

Did HBO Max cancel “Sesame Street”? I think I read it somewhere

No, Big Bird is still alive. However, the company reportedly removed 200 episodes from service from the beloved children’s series.

Why did he do that? I thought streaming services wanted more kid-friendly content, not less

Children’s programming is vital to the health of any streaming service, but it requires a huge investment, according to Alexander.

“Investing in children’s programming, especially live action, means being fully involved,” he said. “You can’t just have a couple of shows and hope that’s enough. It takes a multi-year plan.”

That also goes for animated content, which has been in the spotlight on HBO Max lately. Even a new animated series based on Batman, one of the most important brands and profitable for the company.

“Right now, WBD’s top two priorities are driving growth and driving down costs,” Alexander said. “Children’s programming is an area that top players like Netflix, Apple, Disney and Amazon have already invested in, while YouTube holds most of that audience’s attention.”

Ultimately, HBO Max wants to focus more on strengths like HBO’s adult dramas and movies at Warner Bros., but will likely reinvest in kids’ content again at some point.

What does this mean for the future of HBO Max?

Time will tell.

David Zaslav, the new CEO of Warner Bros. Discovery, is focused on making money from traditional revenue streams like TV ad revenue, cable fees and box office totals, as well as streaming. This is a change from his predecessor, Jason Kilar, who took a gamble that the future was in streaming and put most of WarnerMedia’s eggs in that basket.

The world of streaming is evolving and everyone is still deciphering its future.

“It’s not a game of Kilar was right and Zaslav is wrong, or Zaslav is right and Kilar is wrong. It’s a matter of prioritization,” Alexander said. “The future of streaming is still being determined, but it’s fundamentally where everything is headed.”

Cable is shrinking as broadband expands and the future of streaming will not be the same for everyone, he added.

“It’s a premium service like HBO Max on top of free ad-supported platforms like Pluto TV, also licensing shows to other players in the linear and streaming space,” Alexander explained. “And it’s in conjunction with theatrical releases, it’s not a total replacement.”

Consumer choice will be key in deciding what the next era of streaming — and thus HBO Max — will be, he said, adding that “audience is, and always has been, king.”