Discovery’s self-described “experiments” with programming on the nascent streaming service Discovery + are one of the reasons why it quickly reached nearly 12 million direct consumer subscribers.
The company released streaming totals – of which Discovery + is the largest share – as part of its fourth quarter earnings report. Discovery + was launched on January 4 in the United States and the $ 5 per month “ad-lite” service is being rolled out globally. Several major Discovery franchises on networks such as TLC and HGTV have had a new non-linear streaming iteration debut. A partnership with the BBC yielded the film narrated by David Attenborough A perfect planet.
Like other traditional media companies that still charge heavy fees from pay-TV operators, Discovery has to walk a fine line to power Discovery + and, at the same time, maintain an updated schedule for traditional networks. Asked about this balance in the company’s quarterly earnings conference call with analysts, CEO David Zaslav said: “We are just experimenting, we are changing some – we are changing things. But we still have a total commitment to the existing package. We we are the package. I mean, it’s basically news, sports and us. “
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As for the prospect of transferring more originals for streaming, Zaslav and other executives in the call emphasized the 55,000-hour streaming library and a less-successful mindset than other subscription streaming players. “The main shows that are on the rise,” estimated Zaslav, “represent less than 10% of what people are watching.”
Dish Network President Charlie Ergen, who led Dish’s quarterly call just hours after Discovery, is eyeing the launch of Discovery +. Ergen has long been known for his strict negotiations with programmers and his willingness to abandon networks that are not worth paying for (including HBO, which has been out on Dish for more than two years, as Ergen noted in the call).
“Discovery has great content and we have a long-term relationship with them,” said Ergen. “But obviously, as far as you can get it in one à la carte this will affect future negotiations. Many of our customers do not attend Discovery. Should we overburden each customer with the discovery if they can get it elsewhere? … It’s just economics. It is not rocket science. “
Asked by Morgan Stanley’s Ben Swinburne about whether he feels “optimistic or comfortable with putting his best IP in D to C versus linear”, Zaslav replied, “I wouldn’t say ‘better’. I would say, ‘different’ ”.
The traditional network business remains central to Discovery’s strategic thinking, he emphasized. “He’s still a great model,” he said. “And we think it will continue for a long time. It is also an excellent feeder. So, the people who are watching our cable channels are buying [streaming] products.”
Discovery learned a lot from the first few weeks in the streaming game, said Zaslav. Based on initial customer feedback, he explained, Discovery + “is a service that people could watch in two ways. One is, while they’re cooking, they can – we’ve added a feature where you can – almost like a synthetic channel, where if you love Top fastener and you love Property Brothers and you love Guy Fieri, just put that in the app. And that’s what’s going to work all day. And then, on the one hand, you might really want to watch Attenborough or this great police documentary or Ina Garten is doing a great show with Melissa McCarthy. “
On many subscription streaming channels, he said, the programming is “there for the intent, where you have a fully focused intention to view”. Discovery has some of those titles, he said, “but we also have the ability to be a companion.” The latter function, he said, is crucial to strengthening the relationship with advertisers, about 100 of whom have already purchased time on Discovery +.