Discovery 'committed' to linear TV despite streaming wars
In the wake of Disney announcing that it will close linear channels in some countries, another of the major Pay TV channel groups, Discovery, has made it clear that it is totally committed to its linear channels.
Lydia Fairfax, SVP, head of commercial partnerships for EMEA at Discovery, said the channels are both a first window for content and also a shop window for her company’s direct-to-consumer streaming service, Discovery+.
“The last quarter was one of the strongest Q1s on record for our linear channels and they served a dual purpose because they were also driving people into Discovery+,” she revealed. “We have been using a Red Button facility on the channels to link viewers through to discovery+ and that has driven huge acquisition numbers. So, we will have a dual strategy [linear channels plus Discovery+] moving forwards.”
Speaking at Connected TV World Summit last month, Fairfax added that Discovery is committed to the Pay TV bundle, “and our channels have a key place in those bundles.”
“For us, it is important to continue to invest in channels and we will keep growing them and funding new content for them.”
Like all the major programmer groups, Discovery is in the process of launching its D2C offering globally and started in the US in January.
Twenty-five European markets will be added this year and a key part of the distribution strategy is to partner with Pay TV operators – such as Sky in the UK, Comcast and Verizon in the US, Telecom Italia in Italy, Ziggo in the Netherlands, and Vodafone across 12 European countries.
Discovery on 'huge learning curve'
Fairfax said the Pay TV distribution deals are built around continued support for linear channels, promotions, marketing support and content prominence, which includes how Discovery+ content is surfaced within the user interface (and how often these content ‘windows’ are refreshed).
She stressed the need for innovative and bespoke partnerships and admitted that Discovery is on a “huge learning curve in terms of what those look like.”
It may be less profitable to acquire a new Discovery+ customer via a Pay TV (or indeed, connected TV platform) partnership compared to finding them elsewhere, but this must be balanced against subscriber acquisition costs “where both parties can leverage their marketing muscle.”
Discovery does not have a preferred split between how many subscribers are acquired directly and how many are added via Pay TV or CTV partners.
Prominence is a big deal for apps, and this is a high priority for Discovery when partnering with either Pay TV or connected TV platforms.
“It is key that we are front of mind when someone turns on their television screen, so it is an easy step to go into the service,” Fairfax explained.
Balancing act between discovery and attribution
Acknowledging that content is becoming harder to find because of the proliferation of streaming services, she predicted that “content discovery is going to be the next big thing in this industry” before confirming that Discovery is increasingly open to having conversations about data sharing (such as metadata) that will make it easier for a super-aggregator to surface the programmer’s content.
Reflecting the fears of many content owners, Fairfax said: “There needs to be a balance between content discovery and content attribution. A key thing for us is to prevent our content from being commoditised by being anonymised, with the content appearing without being badged as being from discovery+.
"But, if it is badged and we are increasing the brand awareness for our content, then we can talk, certainly when it comes to deep-linking into an app from a set-top box or from a [connected TV] platform. We see the advantages of having content discovery and the necessary data sharing as part of the deals.”
Discovery is partnering with major connected TV platforms like Amazon Fire, Roku and Samsung Smart TVs for distribution of Discovery+ and Fairfax views their role as reaching into a different user cohort – more likely to be homes that have not taken Pay TV but may have engaged with Discovery on free-to-air channels.
Interviewed by Guy Bisson, research director at Ampere Analysis (pictured with Fairfax, above), it became clear that the studio/programmer group is open to a range of app onboarding deal structures, based on the overall value split. Subscription revenue shares, advertising inventory shares, and selling advertising via a platform partner were all discussed, and none were ruled out. Fairfax inferred that prominence is a key incentive for a better deal.
The Connected TV World Summit took place in June and you can still watch the discussions here.