“Discovery’s new app has taken off largely because viewers love watching people fix houses, tour diners and bicker about their relationships,” the New York Times declared over the weekend.
“In a quest for perfect ambient TV, Discovery Plus is it,” noted The Verge in a Monday morning post.
One week after Discovery revealed better-than-expected subscriber numbers for the first seven weeks of operation for its new $4.99-a-month streaming service, a narrative has emerged that Discovery Plus is a hit.
Certainly, the service’s light reality fare seems to fulfill a need once ably supplied by basic cable networks—as described by The Verge’s insightful Julia Alexander, shows like House Hunters, 90 Day Fiancé and Property Brothers have coalesced into a video streaming service at “just the right moment, when ambient television was becoming a fixture in people’s homes during the pandemic.
“Streaming also makes ambient TV possible in a way cable television can’t because there’s a total ad-free option,” Alexander added. “Loud commercials that play every seven minutes cease to exist. Functionally, I have the option to throw on a House Hunters channel that streams episodes of the show 24/7 and forget about it.”
Discovery CEO David Zaslav told the Times, “Our bet is when the world makes a full rotation, that the content people have chosen when they could choose anything on TV or cable, the content that they love and run home for—90 Day, Fixer Upper, Property Brothers—they’re still going to love that.”
But is it too early to declare Discovery Plus a hit?
During its fourth-quarter earnings call on Feb. 22, Discovery touted over 11 million paid OTT users worldwide, up from 5.2 million in December, just prior to Discovery Plus’ Jan. 4 launch.
The addition of 7 million subscribers was more than double Wall Street forecasts.
"Discovery exceeded DTC expectations by a wide margin in our view," said analyst Steven Cahall of Wells Fargo. "Results also came in ahead and support a year that looks to be characterized by a strong subscriber ramp. Investors will likely underwrite continued investments if this is the case.”
It’s estimated that 5 million of those subscribers are in the U.S. It’s also assumed that 20% of that U.S. base comes from an aggressive Verizon promotional deal that provides Discovery Plus for free to unlimited wireless customers.
Certainly, doubling up investment analysts expectations accounts for what might be called a good start. But lets not forget that Discovery Plus is operating in a streaming world in which Netflix just achieved positive cash flow at a scale of over 200 million subscribers globally.
The only company declared to be within shouting distance of Netflix is Disney, which has around 146 million subscribers across Disney Plus, Hulu and ESPN Plus.
Certainly, for Discovery investors who’ve watched in horror over the past five years as the company’s linear networks have seen steady erosions in reach, 5 million seems like hope.
But those linear channels are in for more pain. “I think Discovery has got great content,” Dish Network Chairman Charlie Ergen said last week. “And we've had a long-term relationship with them. But obviously, to the extent that you can get it on a la carte basis, it will affect future negotiations."
So yes, it's a nice start for Discovery Plus, but it's a long way from scale.
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