March 8, 2021
Upstart subscription streaming video service Discovery+ ended February with a projected 12 million subscribers since launching Jan. 4. The $4.99 monthly service with ads, $6.99 without, offers streaming access to Discovery’s portfolio of branded programming including Discovery Channel, HGTV, Food Network, TLC, Investigation Discovery, Travel Channel, MotorTrend, Animal Planet, Science Channel, and the forthcoming multi-platform joint venture with Chip and Joanna Gaines, Magnolia Network, as well as OWN: Oprah Winfrey Network in the United States.
Speaking March 8 on the virtual Deutsche Bank’s Media, Internet & Telecom Conference, CFO Gunnar Wiedenfels said the SVOD has performed as expected in the U.S., with plans to launch abroad ongoing.
“It’s early days, but everything we’ve seen so far has just been super encouraging,” Wiedenfels said. “Top to bottom there’s not one metric that’s disappointing. The engagement metrics are looking very strong. We’re making more money on our direct-to-consumer subs two months here out of the gate and we have significant growth potential, and I think pricing potential.”
Indeed, the CFO said subscribers have watched an impressive 93% of the platform’s 55,000-episode content offering.
“It’s all super encouraging,” Wiedenfels said, adding that more than 100 advertising brands are on the platform — a tally that is expected to double in a couple months. “We’re already seeing beyond what we saw in the linear TV world in terms of viewer time and our subscriber base.”
Notably, the bulk of Discovery+ subs are enrolled in the ad-free tier — largely due to the Verizon marketing tie-in that mandates the more -expensive pricing option following a 12-month trial period.
Rollout of the platform internationally includes partnerships with Sky in the U.K., Vodafone, Saudi Telecom, etc. These deals are expected to materialize in the second quarter over a 12-month period, according to Wiedenfels.
“The Olympics [Tokyo Summer and Beijing Winter] should be one the key drivers for the international rollout this year,” he said. “We’ll see the order of magnitude, but we’re very excited about it.”
International streaming expansion has already been started by Discovery’s former Dplay video-on-demand platform that has been transformed into Discovery+. The media giant operated Dplay in Italy, Japan, Netherlands, Nordic countries and Spain.
The streaming platform is eyeing 70 million U.S. homes, and 400 million internationally. Global rollout would focus on wireless distribution via portable devices.
“We’re not talking about 700 million TV homes, we’re talking billions of connected devices,” Wiedenfels said. “Total expansion of our addressable markets.”
The CFO said rollout of the service would take longer due to individual country challenges, including timelines and existing distribution deals. Wiedenfels doesn’t think there will be a drop in linear carriage agreements with the advent of streaming video.
“We should be able to find win-win common ground in partnerships,” he said. “We have to acknowledge that the landscape is changing. These discussions are now one notch more complicated than they used to be [due to streaming]. I feel very good about and our [linear] partners are very excited.”