Discovery’s Next D2C Play: Niche Content and Owning the Connected Home

Discovery Communications

Discovery Inc.’s focus on non-scripted content (i.e. documentaries, cooking shows etc.) in niche categories is helping its Discovery Go direct-to-consumer streaming service compete with the likes of Netflix and Amazon Prime Video, according to CEO David Zaslav. And the company sees an opportunity to use its specialism in niche categories to be a major presence in the connected home.

Discovery expanded its catalogue of non-scripted content last year with the acquisition of Scripps Networks Interactive for $14.6 billion, which helped drive revenue growth of 54 percent in 2018.

And Zaslav, speaking on an earnings call, said that Discovery’s specialism in niche categories is keeping it competitive with streaming competitors, despite the fact that some have been spending more on non-scripted content recently.

“This is difficult stuff, and it’s what we do for a living,” he said. “We have a team that does only food, and we work with production companies that deal almost primarily with us, and we’ve figured out how to create shows and to build characters in that genre.”

“When people go to HBO and Showtime and Amazon Prime and Netflix, they’re really going for something else. They’re paying $10-15 for scripted series and scripted movies, that’s what the brand is.”

He believes that not only does this specialism differentiate Discovery from its competitors, but the nature of the shows it produces creates other business opportunities.

“On our side, we’re focusing on this idea that [audiences] watch and they do,” he said. “And that’s a huge opportunity. They watch golf, but they also buy golf equipment, they go to Tiger [Woods, who Discovery have a content partnership with] for instruction, they want to see where to take a vacation with golf. When it comes to food, people watch our content, but they also want recipes, they want to talk to experts […] We’re in an environment where we’re a real market leader, we’re differentiated, and we have this opportunity in this ‘watch and do’ to build businesses in these funnels”.

These business opportunities seem mostly conceptual so far – Zaslav didn’t specify how Discovery would monetise this specialist knowledge outside of content. But he does see potential in 5G enabled connected homes.

“This whole idea of 5G is a part of the whole narrative of ‘who’s going to own the home?’” he said. And he believes Discovery’s content makes it well placed to be a big presence in audiences’ connected homes, specifically in their kitchens.

“I think we have a real opportunity – we have the greatest chefs, we’re the leader in recipes, we’re the leader in short form, we’re the leader in brand and credibility, we’re the leader in content,” he said. “We’re very active in aggressively pushing that ourselves, and having discussions with everybody who’s in the kitchen about how do we own the kitchen. Whether it’s distributors with 5G, or players with voice activation in the kitchen, or with screens in the kitchen.”

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