Interpret: Discovery+ Fills Strong Niche

Discovery Channel’s new Discovery+ streaming service, which launched Jan. 4 in the United States, is filling a strong niche, according to Interpret research.

Available for $5 per month with a commercial-free version at $7 per month, the platform not only offers shows from Discovery Channel, with more than 55,000 episodes at launch, but also content from Discovery-owned HGTV, TLC, Food Network, Animal Planet, OWN and more. Discovery also has partnerships with BBC, A&E, Group Nine and others to provide additional content.

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“Discovery’s portfolio of channels offers an array of science, reality and non-fiction programming, providing it with a unique niche of content that is differentiated from Disney+, HBO Max, Peacock or other broadcast and cable TV network-oriented streaming services,” according to Interpret.

Interpret’s New Media Measure found that this type of content is popular, with viewership of Discovery’s portfolio of channels ranging from 7% to 20% of pay-TV subscribers.

“Discovery is betting that those same people will happily pay $5 per month, particularly if they leave traditional pay-TV,” according to Interpret.

Discovery+ is already available in the United Kingdom and Ireland and intends to roll out to 25 international markets this year. A promotion from Verizon provides as much as one year free of Discovery+ to its wireless customers.

Discovery Touts Overseas HGTV, Food Network Launches for Driving Revenue Increase

Media giant Discovery Feb. 27 reported fourth-quarter (ended Dec. 31, 2019) revenue increased 2% to $2.8 billion, with U.S. advertising and distribution revenue up 1% and 5%, respectively. International advertising and distribution revenue increased 5% and 10%, respectively.

Discovery’s portfolio of premium brands includes 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, as well as OWN: Oprah Winfrey Network in the U.S., Discovery Kids in Latin America, and Eurosport, home of the Olympic Games TV broadcast across Europe.

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Specifically, Discovery attributed revenue gains in part to the globalization of domestic media brands HGTV and Food Network. In 2019, HGTV and Food Network launched in more than 30 new countries and territories combined.

Total share of viewing in 2019 for Discovery’s top 10 international markets increased 2%, on average. The company continued to establish foothold across existing and new direct-to-consumer platforms in Europe, including Dplay in 10 markets, TVN Player in Poland, and Joyn in Germany.

Discovery said it was the most-watched pay-TV portfolio in the U.S. among women 25-54 and 18+ for both primetime and total day in 2019. TLC delivered its best year ever globally, improving both international share and viewership by 8%, and in the U.S., TLC was the fastest growing ad-supported cable network among women 25-54 and 18-49, with its best primetime performance in 16 years.

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“2019 was a year of promises made and promises delivered,” CEO David Zaslav said in a statement. “Our differentiated local content strategy and global scale, coupled with our unique free cash flow conversion profile, provide distinct financial flexibility that allows us to adapt to changing media consumption habits.”

 

Discovery CEO: SVOD Market Turning into ‘Street Fight’

On the heels of WarnerMedia putting a name (HBO Max) to its pending subscription streaming video service, Disney launching branded service as well as expanding Hulu globally, Discovery CEO David Zaslav says “chasing the same ball” (i.e. scripted digital content) with the world’s biggest media companies is not the company’s focus.

Speaking July 10 with CNBC from the Allen & Co. confab in Sun Valley, Idaho, Zaslav contends the bustling SVOD market is turning into a “street fight” — a scenario he believes Discovery has successfully side-stepped.

“[About] 50% to 60% of the content that people consume is not scripted series or scripted movies,” Zaslav said. “For us, it’s home [HGTV], food [Food Network], Discovery, Oprah, crime [ID], Chip and Joanna Gains [‘Fixer Upper’]. We own most of the golf [programming] in the world, most of the cycling. We have almost all [non-scripted] quality content. And we own it everywhere in the world.”

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With Netflix and Hulu expanding non-scripted programming, including documentaries and food-themed reality TV, Zaslav says Discovery’s market hold on food, home and crime-themed shows is not in threat.

“We’re pretty secure in our space,” he said. “People aren’t buying Netflix to watch a home [improvement] show. We think we have something very differentiated and people come to us for it. They come to us for it on all platforms in all languages.”

Yet, much of HGTV, Food Network, ID and Oprah content is consumed through traditional pay-TV channels — distribution under threat by over-the-top video.

Zaslav agrees the traditional linear TV business is in secular decline. But he said Discovery generated about $3 billion in free cash flow in its most-recent fiscal year.

The executive said Discovery dominates the female non-scripted market in the United States, with OTT video businesses targeting golf (outside the U.S.), cycling and natural history.

“We have a low to mid-single digit growth company, having nothing to do with all of the global IP that we own,” he said. “We think it’s sustainable that we can grow low to mid-single for the next several years.”

Zaslav contends streaming movies and TV shows has become commoditized with Showtime Now, HBO Now, Amazon Prime Video, Netflix, Apple TV all offering similar content.

“That’s why we did Scripps [Networks] acquisition, because we think people that love food are always going to come to food, people that love home are always going to come to home. So, we think that this is an ecosystem that will work together,” Zaslav said.

With Disney buying Fox, Comcast acquiring Sky and AT&T buying Time Warner, Zaslav dismissed suggestions Discovery would have merge with another major media company to remain competitive.

“We’re the largest independent media company,” he said. “We think some of the assets we have that we’re the largest international media company. We’re in 200 countries.

“But in the long run if we’re wrong, then we have the biggest assortment of IP in affinity groups that people love and we’re in every language around the world. We think that we’re going to win either way. We’ll be more valuable.”