Discovery exec talks about the arithmetic of a cable+streaming strategy

Discovery+
Discovery+ comes in two pricing tiers—$4.99 a month with ads or $6.99 without them. (Discovery Inc.)

For Discovery, running legacy linear channels as well as a new OTT streaming service is not an either-or proposition but a yes-and situation.

Lisa Holme, group senior vice president for content and commercial strategy at the New York firm, explained in a keynote interview at FierceVideo’s StreamTV Show that the company not only sees continued upside in both distribution options — it’s using its Discovery+ streaming service to promote its cable and satellite fare and vice versa.

That, Holme added, is because Discovery is not suffering any existential angst over what content should go where.

“Many shows can sort themselves into where they should premiere and where they should live,” Holme told interviewer Joan E. Solsman, CNET senior writer for tech and media.

For example, familiarity works for legacy channels while novelty resonates more on Discovery+. Her description of good programming for D+ “I’m reading about it, people are talking about it, it’s kind of noisy and buzzy.”

Holme added that Discovery+ is also seeing the demographic differences one might expect for a non-traditional video service: “We do have a slightly younger audience, so we are also trying to appeal to the cord cutters and cord nevers that have fallen out of the TV ecosystem.”

But Discovery expects to see viewers heading in both directions, citing the D+ spinoff, “Home Town: Ben’s Workshop,” created for HGTV woodworking guru Ben Napier.

“If you love that star, you can watch them on the network,” Holme said. “But if you love them even more, come to Discovery+.”

The company is flipping that script with Magnolia Network, its joint venture with home-design stars Chip and Joanna Gaines: Magnolia shows are debuting on Discovery+ before a planned 2022 launch of the linear channel.

“We’re getting a really good read on which shows are resonating, which talents are resonating more,” Holme told Solsman. “I think this is probably the first time we’ve seen a cable channel roll out first on a streaming service.”

Similarly, Shark Week—Discovery’s annual deep dive into toothy, cartilaginous fish—will get its own Discovery+ series in addition to the traditional programming on linear Discovery channels.

“Shark Week this year will be bigger than it’s every been,” said Holme, adding that it represents a big opportunity for Discovery to monetize the attention of superfans by selling old-fashioned merch like hoodies and towels.

Discovery+ in general caters more to a lean-back audience looking to watch at their own time, but Holme noted that live content can work there too. She cited both the upcoming Olympics coverage on Discovery+ in Europe as well as Discovery’s experience covering the SpaceX Demo-2 launch last May that returned human spaceflight to American soil after a nearly nine-year absence.

“So many people watched it—I know I tuned in—and that was a great livestreaming experience,” she said. “You may see us experiment going forward with big, big live events, something that people already care about a lot.”

Discovery+ comes in two pricing tiers—$4.99 a month with ads or $6.99 without them—and Holme said the company would rather subscribers go with the cheaper service.

“We love subscribers who take the ad-light product for only $2 less,” she said, saying its “incredibly vibrant ad business” allowed it to make more money from that cheaper subscription.

(Discovery CEO David Zaslav said as much at a MoffettNathanson conference in May.)

The cheaper tier is also more amenable to being bundled with other services along the lines of such precedents as Disney+ being sold alongside Hulu. “I do start to think you’ll see more and more of those instances.”

Holme could not, however, offer any insight about another upcoming Disovery premiere—its planned merger with WarnerMedia.

“You know about what I know at this stage!,” she told Solsman about the $43 billion transaction that Discovery and WarnerMedia corporate parent AT&T announced May 17, but which still has to get through regulatory approval. “Lots of things to happen between now and then; hopefully the deal gets approved, and then onwards from there.”