Ambitious new direct-to-consumer offering Discovery+ was unveiled Wednesday, and it looks to be a well-thought-through play.
Discovery’s share price increased slightly by 0.27% to $27.75 after the unveiling, suggesting investors were content with the details. Given the stock plunge ViacomCBS saw earlier in the year after its plans for Paramount+, placating investors is no small feat.
The service in the U.S. will cost $4.99 for ad-lite (5 minutes of ads per hour) and $6.99 for ad-free. That’s a low price point that will make Discovery+ quite affordable.
Discovery is attempting to corner the market on nonfiction fare. There were 242 unscripted series released across U.S. SVOD services in 2020, up from 125 in 2019, according to Variety Insight. Discovery+ looks to blow this out of the water, promising new shows premiering 52 weeks a year, with unparalleled tonnage at launch with 50 originals available then and over 55,000 older episodes available in the library.
The number of launch originals dwarfs those from other recent new SVOD platforms. Of course, budgets for originals made across SVODs are not equal. But Discovery is launching a service based on existing franchises with built-in fans and is extending these with smart moves like the collab between Food Network stars Bobby Flay and Giada De Laurentiis.
Perhaps the biggest surprise from CEO David Zaslav at the Wednesday presentation was the announcement that Discovery+ will feature content from A&E, History and Lifetime, rival unscripted channels from A&E Networks. In the subsequent investor call, Zaslav clarified that Discovery has licensed content from A&E for several years; it’s unclear if future content from these networks will be included.
Based on data from VIP’s Viewniverse study, this is a great move to increase the potential reach of Discovery+ domestically. Some 48% of U.S. consumers 18-64 named at least one Discovery brand as one of their top 10 most important video brands, but adding in the A&E Networks portfolio boosts this to 63%.
Discovery estimates the SVOD will not cannibalize existing cable subs but rather sit alongside it, increasing ARPU from these linear subscribers from $7 to a maximum of $16 should someone be a linear subscriber through cable and also have Discovery+ Ad Lite.
It’s important to note that Discovery+ is not just a domestic product but will be launched globally on Jan. 4. One thing that may be missed in the U.S. is that Discovery holds key sporting rights internationally (and operates the “Eurosport” channel across Europe), including the Olympics in Europe. These will all be integrated into regional versions of Discovery+, broadening the potential subscriber base in these countries.
The details Zaslav gave out today gives Discovery+ a good chance for a solid start. That’s not to suggest it will do Disney+ numbers, but it wouldn’t be a shock to see it with 10 million domestic subscribers by the end of Q2.