- The key facts.
- Takeaways from veteran programming exec Dan Salerno and myself.
- And another veteran network exec added valuable feedback.
- “With discovery+, we are seizing the global opportunity to be the world’s definitive product for unscripted storytelling.” David Zaslav
- “discovery+ is the perfect complement to every streaming portfolio…”
- U.S. launch date: January 4th.
- Ad-light (5 min) version: $4.99 per month
- Ad-free version: $6.99 per month
- Verizon is offering free discovery+ subscription packages across its many video and online services
- UK: Already on SKY Q
- Italy: On TIM in early 2021
- Soon in 25 additional countries
- Localized price points
- Different packaging options
- Available at launch on connected TVs, web, mobile and tablets.
- “52 weeks of premieres” across lifestyle and real-life verticals.
- Launch with 55,000+ episodes from 2,500+ current and library shows.
- Supplying networks are HGTV, Food Network, TLC, ID, OWN, Travel Channel, Discovery Channel and Animal Planet.
- Year 1: 1,000 hours of originals.
- Sources: its existing portfolio of franchises and talent.
- In European markets that are launched, discovery+ will also include streaming access to the 2021 Tokyo Olympics.
- A+E Networks: A&E, History and Lifetime.
- BBC: Nature / Wildlife programs (includes The Mating Game, a new series produced with David Attenborough.)
- Environmental organizations: Explorers Club, Nature Conservancy, Oceana, WWF and others.
- 1st look at content from the Magnolia Network, the forthcoming multiplatform jv with Chip and Joanna Gaines.
- Include Boston Beer Company, Kraft Heinz, Lowe’s and Toyota.
- discovery+ is late to market: other powerful streamers offer unscripted programs
- Netflix and Amazon Prime already offer a substantial library and a pipeline of new documentary, lifestyle and unscripted programs.
- Netflix is expanding its spend on unscripted as it races to become the “global basic cable service.”
- Big question: Will consumers afford another service that’s well-enough covered?
“And” not “Or”
- “Rather than being seen as an “or” streaming service for viewers’ decision-making (e.g. “Should we subscribe to Netflix or discovery+?”), discovery+ can compete as an “and” service (e.g. “Let’s subscribe to Netflix and discovery+!”).” VideoNuze
- The unscripted positioning gives discovery+ a competitive lane of its own.
- The major streamers are bidding up the prices for their A-list projects.
- discovery+ will stick to the company’s Factual programming roots, delivering originals at a fraction of the cost of the Scripted series and A-Lister documentaries featured by Netflix and others.
- “The dark winter across the U.S and northern hemisphere is peak stay-at-home viewing time, and this year, likely even more so.”
- “The second wave of the pandemic will likely see viewers post-holiday ‘cocooning” and in search of new family-friendly content, which makes the January launch of Discovery + a very smart strategy” says StoryCentric’s Ed Hersh.
Revenues: My back-of-envelope math
- How many streaming subscribers does discovery+ need to match the revenues from its heritage Cab/Sat model?
- The bouquet of Discovery’s channels earn monthly U.S. subscriber fees that are paid by the operators.
- The monthly fees range from more than 50 cents for Discovery Channel and 30 cents for HGTV to around 20 cents for Travel.
- Let’s estimate that all of Discovery’s channels combined earn $1.90 / month, or $22.80 / year.
- Cord-cutting is rapidly advancing, and analysts predict as few as 50 million U.S. Cab/Sat subscribers by 2026.
- Under these assumptions, Discovery’s 2026 subscriber fees would be 50 x $22.80 = $1.14 billion.
- At the discovery+ price point of $4.99 / month*, or $59.88/year, around 20 million U.S. subscribers for the new service would match the $1.14 Bn Cab/Sat subscriber revenues guess-estimated for 2026.
- That’s doable!
- (* I chose the ad-light version because it is preferred by most customers when they are given a choice.)
Global Scale: There’s more…
- As covered in my Netflix 2021 study, analysts predict a global footprint of 4.5 billion streaming-capable Internet subscribers by 2026.
- discovery+ will become available to most of them, indicating significant revenue potential outside the U.S. for such a recognized global brand.
Verizon: The Disney+ precedent
- David Zaslav stressed the importance of the Verizon partnership.
- Verizon offered similar free access to Disney+ at launch (and later the bundle with Hulu and ESPN+) which proved highly effective for Disney+, driving an estimated 15% of its year 1 subscribers.
DAN SALERNO’S TAKEAWAYS
Dan is a veteran programming executive and frequent guest to our podcasts and posts.
90 Day Fiancee
- Extending the top performing franchise to the SVOD service Is key.
- 90 Day superfans have already followed the concept across countless spin-offs and are highly likely to continue here.
- The decision to extend their biggest series brand speaks volumes about the commitment to discovery+ as the future.
- “The two major natural history projects Discovery announced last year are being shifted to the new service. I’m not surprised. They’re strong anchors for the new service, easily marketable, and fulfill the legacy brand promise shaped over three decades. It’s consistent with the migration of landmark natural history on the streaming platforms, including Netflix, Apple TV and Disney+.”
- The inclusion of the A+E Networks‘ brands and library series is huge.
- Embraces a potential competitor and reinforces discovery+ stated mission as the streaming home for non-fiction.
- The content sits well alongside Discovery’s library offerings.
- Longtime viewer favorites like The First 48 and 60 Days In will be a draw.
- A&E garners revenue without the need to absorb the cost of operating an SVOD.
- Olympics on discovery+ in Europe is big.
- I’m a biased Olympics fan, but I love this. It’s a marketing platform like no other.
The service skews female
- Promos are now on the air for the service. Interesting to note, they’re only using their key brand logos in the promo: HGTV, Food, ID, TLC, Discovery, Animal Planet.
- It reinforces the program highlights as well. Romance, Home, Food, Lifestyle, True Crime.
- Skews heavily towards the female side of their portfolio. They’ve been betting big on their Big Four women’s nets and it continues with the SVOD service.
More thoughts on timing…
“Discovery has a long history of launching into new businesses. Some work, some don’t. Founder John Hendricks view has always been that the Discovery brand is a content provider, independent of any platform. On that basis, it succeeded. However, over the years, we learned that Discovery’s non-fiction content was challenged to drive the adoption of a new platform, or new technology on its own. That had to come from entertainment, children’s and sports.”
“In many instances, Discovery did best when a new technology grew to a critical mass, and then timed their entry to exploit the non-fiction niche to the max. In other cases, Discovery claimed the shelf space early, and waited for the industry to embrace it. Global networks and HD offerings were just two examples.”
“With their history, Discovery’s later entry into the SVOD space could prove to be good timing. SVOD platforms are readily accepted in most homes, global reach is within reach, the Scripps acquisition provides a library and scale, and the Discovery brand value remains one of the best in media.” Dan Salerno
Feedback from a friend...
…who happens to have been a programming exec for several leading unscripted channels
Loved your back-of-the envelope calculations: Low expectations seem to be the key. But it’s getting crowded out there. It got me thinking…
- The addition of the A&E library is indeed huge, but I wonder why the announcement didn’t make a bigger deal of this? It also suggests that Disney doesn’t care much about their half-owned A&E, History and Lifetime. Hard to imagine these bitter rivals getting together for a long term relationship… or is this like a 90-day trial relationship that leads to something bigger?!
- With a few notable exceptions, non-fiction product doesn’t seem to have the premium value that attracts viewers like dramas, movies and comedies on the streamers or premium nets. Who’s going to buy Discovery+ to see MORE House Hunters and Chopped? These kinds of shows already seem over-exposed. Will be interesting.
- Sebastian Maniscalco’s opening joke about Naked & Afraid had a ring of truth. Unless Giada DiLaurentiis and Bobby Flay are participants, it seems like … it’s all just more of the same, even the “special” episodes or spin-offs.
- To the above point, there doesn’t seem to be much “edge” to the programming, which makes it family-friendly but not especially attractive to younger viewers or those used to getting more intensity from HBO, Netflix, Amazon or Hulu.
Hence your final takeaway:
- “Will consumers afford another service that’s well-enough covered?”
- I have one word of warning: Quibi.
- Dan Salerno on How the channels are responding to the rise of the streamers.
- Ed Hersh on Non-fiction programming in the time of BLM, COVID & Netflix