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Discovery Sizing Up Its Own OTT Play

Jeff Baumgartner
11/11/2019

Don't look now, but another major TV programmer is pursuing a direct-to-consumer streaming service for the US market.

Following moves underway at Disney (Disney+), WarnerMedia (HBO Max) and NBCUniversal (Peacock), Discovery Communications is exploring an OTT service that would feature content from its various networks and channels, including those acquired from Scripps Networks in early 2018.

Building on Discovery's direct-to-consumer activity in regions such as Europe, the media company/programmer is "now starting to examine a new opportunity" for the US that would aggregate all of Discovery's channels, David Zaslav, Discovery's president and CEO, said last week on the company's Q3 call.

That would presumably include everything from Discovery Network, TLC, HGTV, Mototrend, Sci, Food Network and Great American Country, among others.

"What we're doing is … looking at the strength of our IP [intellectual property] in the US in the aggregate," Zaslav said. He noted that Discovery has seen how younger US audiences are gravitating to and using the programmer's "GO" platform, a streaming service that comes with a consumer's traditional pay-TV subscription.

Zaslav reasoned that an aggregated, direct-to-consumer offering from Discovery would allow the programmer to broaden its reach and "mount an attack" on consumers who don't get cable TV today. "That's the full ecosystem. That's what everyone is looking to do and needs to do, which is take the great IP and reach everyone. We want everyone to watch our content."

Zaslav didn't say when Discovery would pull the trigger on a direct-to-consumer service for the US market and what kind of ad or subscription models it might use. But he noted that the company will be looking into it more deeply "over the next few months."

"Stay tuned … because we have a bunch of good ideas, and we're going to be pretty aggressive coming out of the gate," said Peter Faricy, CEO, global direct-to-consumer, at Discovery, and an exec who previously oversaw Amazon's music and movie product categories in North America.

In the meantime, Discovery appears to be priming the pump a bit with Food Network Kitchen, a just-launched OTT service focused on "live, interactive cooking instruction" from chefs and other culinary experts, alongside 800 on-demand classes and a library of thousands of recipes.

Discovery's 'Dplay' hints at possible US model
Discovery's traction with Dplay, an ad-supported streaming service launched in countries such as Denmark, Japan, the Netherlands, Spain and the UK, "has also opened our eyes a little bit … particularly for the US focus on what's happening to the pay-TV bundle and subscriber loss," said JB Perrette, president and COO of Discovery Networks International.

"I think that's the defensive way of looking at it," Perrette added. "The offensive way to look at it, which is what we've seen internationally, is there's also [an] enormous … base that has never or doesn't have access to our content or is choosing not to have access. And yet would love it."

As an example, he said more than 70% of consumers in Italy don't get a pay-TV service, and Dplay has helped Discovery get its content to that massive part of the country's viewing audience.

And Discovery would have a lot of content to support a new direct-to-consumer service for the US. Zaslav said the company generates about 8,000 hours of original content annually, alongside a library that pushes the aggregate vault into the "several hundred thousand" hours. And he likes where Discovery fits with the kind of content it produces compared to the much more expensive fare that other major programmers and studios make for their new OTT variants.

"It's a huge competitive advantage, especially as we watch our industry peers on the premium scripted side pay whatever it takes to amass enough content for a slice of the fragmenting entertainment space within the direct-to-consumer market," he said. "We are not in that series scripted and movie side of the entertainment business. It's crowded. It's aggressive. It's expensive and it's risky."

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— Jeff Baumgartner, Senior Editor, Light Reading

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