Discovery, finally entering the US streaming war? : It has its own strengths, but the future is uncertain | DIGIDAY [Japan version]

Discovery, a US television network group, enters a fierce streaming war.

According to agency officials, the company plans to launch D2C streaming service "Discovery +" in the United States from the first quarter of 2021 (Dplay is available in some countries such as Europe and Japan). .. There have been rumors that the company is aiming to launch an independent streaming service in the fourth quarter of 2020, but details such as pricing, sponsorship packages, and distribution plans for the service have not been revealed. , Was questioned about when (Discovery spokeswoman did not comment on Discovery Plus).

Discovery's CEO, David Zaslav, has spoken about delivery services at the company's earnings announcements and industry conferences, but the details have remained unknown. At a virtual event hosted by Goldman Sachs on September 17, he said, "We will soon launch a delivery service." The company hasn't officially announced the service name yet, but Tech Business Media's The Information has previously reported that it will be named Discovery Plus. In fact, Discovery filed a trademark application for the trademark "Discovery +" on July 10.

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Is the target for those who do not watch TV?

According to agency officials who spoke about Discovery Plus, the service will be priced differently depending on the presence or absence of ads, and if it has ads, it will run up to 5 minutes of ads per hour of the program. However, he has not yet received specific information about the actual service subscription fee.

In addition, although the specific number is unknown, it is seeking sponsorship contracts with a certain number of advertisers at the time of launch. One executive said Discovery's advertising sales strategy was "close to Peacock." At the time of launch, NBCUniversal's streaming service Peacock had 10 sponsors. This is in contrast to WarnerMedia's strategy. The company is looking for contracts with a number of advertisers for the launch of HBO Max, an advertising distribution service next spring.

In the case of Discovery, it seems they haven't yet offered a specific sponsorship package to advertisers. Conditions such as guaranteeing ad impressions, co-marketing for a successful service, and package pricing remain unclear.

"It's attractive at this point, but we need to keep an eye on what the specific packaging will look like," said an agency executive.

Agency officials also agree that the purpose of Discovery is to serve those who aren't familiar with the company's TV contracts. Discovery offers an app that allows you to receive programs by logging in if you have a pay-TV contract with the company. "Discovery Plus is the recipient of those who have quit their TV contracts (given that there are already distribution apps tied to TV contracts)," another agency executive said.

Aiming for a complementary position for other services?

Entertainment company executives analyze: "Discovery is younger than TV viewers and attracts those who are considering canceling pay TV contracts, so it is suitable for young people and original programs such as reality programs and documentaries that appeal to people in their 20s and 30s prior to Discovery Plus. We have introduced programs featuring popular celebrities to the market. "

Discovery has posted job listings on LinkedIn for staff on the service's original show. Speaking of positions, directors of original programs, "reality programs such as food and crime documentaries, fashion shows", "documentaries on the themes of science, animals, technology, etc." and general directors of special programs are being recruited.

Given that Discovery has channels such as "TLC," a lifestyle channel for Latin America, and "Food Network," a food channel with one of the highest subscription rates in the United States, Discovery Plus. Is likely to become a strong streaming service in the home, cooking, lifestyle-related programs and science-related documentary fields.

If that happens, it will be a niche service compared to general entertainment services such as Netflix, HBO Max, and Peacock. This niche content complements other services and can be a strength. For example, Disney +, which has family-friendly content launched by Disney in November 2019, currently has 60.5 million subscribers.

The value of TV shows is unknown

Discovery's CEO, The Slav, said at a press conference on August 5, "Our content is appealing to audiences with Netflix, Disney Plus, and Amazon Prime. In fact, American women It's the content I see the most. " Certainly, having a TV program that specializes in a specific category is a characteristic of Discovery that other services do not have. As a result, in the future development of Discovery Plus, it will be possible to aim to acquire an audience by making full use of not only original programs but also a wider variety of program libraries.

However, it is unclear how many of the programs that Discovery is currently broadcasting on TV will be available for viewing on Discovery Plus. That's because providing TV shows to streaming services can violate distribution contracts with pay-TV operators. Looking at Discovery's job listings posted on LinkedIn, it seems that Discovery is considering buying programs from other companies for Discovery Plus, as well as existing TV and original shows.

At a virtual event hosted by Goldman Sachs in September, Zaslav said, "Video distribution has become very popular with Netflix, Disney and HBO, and viewing content on devices has become more widely accepted. Will enter there with a huge amount of fresh original content. "

However, it is unclear on which device Discovery Plus will be available. Agency officials have asked Discovery if it will be available on Amazon and Roku smart TVs from the time the service launches, but the company hasn't disclosed details of its distribution plans.

Get involved in a "conflict" with the platform?

A year ago, Discovery Plus might have been able to use Amazon and Roku, the top connected TV platforms, without any problems. But since the beginning of the year, both platforms have taken a tougher stance, asking them to cooperate with their subscription sales when negotiating distribution with TV stations, and demanding partial sales of their advertising inventory. WarnerMedia and NBCUniversal have not yet signed a contract with Amazon and are in the process of negotiating a distribution contract with HBO Max and Peacock, respectively. NBCUniversal signed a contract with Roku on September 18, but negotiations between WarnerMedia and Peacock remain deadlocked.

Discovery could also fall into a similar stalemate in front of Amazon and Roku. The company isn't as big as WarnerMedia or NBCUniversal, and it's hard to expect influence in negotiations. In the first place, it is unclear whether there is room for negotiations with Amazon and Roku (which can be said to be essential for expansion) while raising future expansion as an issue.

Although Zaslav did not make a statement at the time of the Goldman Sachs virtual event, he said that expanding the distribution channel of Discovery Plus was an issue. "Currently, our only challenge is that it's not available on any device. We'll soon be working hard to solve this."

[Original:'This is for cord cutters' Discovery aims to launch Discovery + streaming service in early 2021]

TIM PETERSON (Translation: SI Japan, Editing: Shohei Branchjima)