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Discovery maps out new paths to growth

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05 June 2015

Discovery underlined this week the extent to which it is building out from its origins as US pay-TV broadcaster specializing in factual programming.

At a press conference at the Paris Open fronted by CEO David Zaslav, there were four key themes: sport, OTT, content and the international market.

Discovery announced the full launch of its own direct to consumer OTT service Dplay in Europe, a similar product to Netflix or Sky’s Now TV.

Discovery executives said the launch of Dplay was part of a strategy of adapting the broadcaster to the new ways in which viewers are watching content at any time and on any device.

First launched in Norway last year, the video streaming service is now available as a beta product in Denmark, Italy and Sweden. 

Dplay aims to reach one million subscribers by 2017. It gives access to select programmes from across Discovery’s portfolio of channels. Pricing strategies will vary by market.

There are no plans as yet to launch the service in the UK, where Discovery’s content is already available on Now TV.

Discovery also talked up its plans for Eurosport, after buying a controlling stake last year. Eurosport has signed ten new sports rights deals in the past week. Discovery is also launching a local Eurosport channel in Denmark, and relaunching Eurosport Player, the channel’s online simulcast.

The deals include acquiring the rights to Wimbledon tennis for Belgium and the UEFA Europa League in Sweden, Norway, Denmark and Singapore.

Discovery aims invest more in the localisation of Eurosport channels in each market, with more local rights, programming and personalities. In this, Discovery aims to follow the model it has adopted when rolling out its channels around the world, making localization and investment in local content a priority.

Eurosport chief executive Peter Hutton said: “The challenge now is to make Eurosport far more locally relevant.”

The push into sports underlines how Discovery no longer sees itself as simply a factual TV player.

As well as moving into sports via its investment in Eurosport, it has also focused on the kids TV market, particularly in Latin America. Zaslav said Discovery Kids was the number one cable channel in Brazil.

Discovery is also dipping into scripted content, greenlighting a drama about the origins of Harley Davidson. Zaslav said Discovery chose to go with the Harley Davidson story because “we think it is global…and because we think it will work around the world.”

However, he suggested that Discovery would not invest too heavily in scripted, saying “the market is getting pretty crowded.” Companies such as Netflix, Amazon, HBO and Starz have poured money into drama in recent years.

Discovery also confirmed that it is moving away from the more sensational end of factual programming. Earlier this year newly installed Discovery Channel president Rich Ross spoke about returning to its roots in documentary, after criticism for shows like Eaten Alive and Megalodon.

Zaslav said this process had actually started before Ross arrived at Discovery. “We began that pivot about a year ago,” he said.

“Non-fiction had started to get more aggressive in terms of characters,” he said, adding that “some of the content you were seeing with beards and cows and pigs running through the kitchen – we thought lets not do that any more.”

The focus now, he added, is on the core Discovery brand with an emphasis on adventure, exploration and science.  “We strive for quality,” said Zaslav.

Much of Discovery’s growth in recent years has come not from its home market in the US, where it has seen weaker ratings and ad revenue, but from international markets. Some 55% of revenues now come from its international networks – and Discovery is aiming for that figure to reach 65% in three years. Its channels are now available in 230 countries and territories.

President of Discovery Networks International JB Perette said there were three key focuses to the business: growing audience and share on all platforms; focusing on ‘beacon brands’ like the Discovery channel, which is important in ‘era of fragmentation’; and investing in must have content.

Discovery now invests $2bn annually in content. “I have never been more optimistic about the content business,” said Zaslav. “To start with we own all our content, that is a huge advantage. Think about the pliability and flexibility of content. We can put it on any platform, any device...that is a differentiator.”

Discovery has bought a swathe of UK production outfits, investing in superindie All3Media (with Liberty Global), Betty, Raw and most recently Sam Mendes’ Neal Street.

Zaslav said he saw he real opportunity for Discovery in investing in production companies, describing the deals as an opportunity to build scale in content and own IP.

Discovery, he added, was focused on holding on to IP as much as possible. He described the production investments as creating “an IP farm” which could “nourish” Discovery’s channels and OTT service Dplay.


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