Discovery Networks International is launching OTT services throughout Europe. Its top executives explain how the channel operator will win streaming customers in big numbers, as it starts on its ‘March to a Million’.
When TBI was the first to report in early June that Discovery Communications was making a concerted effort in OTT in Europe with a cluster of new Dplay-branded platform launches, there was surprise in some quarters that a company so invested in traditional TV (and so protective of its rights) would dive so deeply into streaming.
The SVOD and AVOD play is, however, essentially an extension of Discovery’s diversification strategy. Having been a pay TV specialist for decades, it made an aggressive free-to-air play with the US$1.7 billion deal for European broadcaster SBS in 2012, though its international FTA strategy was already underway at that point.
Discovery’s OTT services can co-exist alongside free and pay TV in the same way that free TV was welcomed into the mix a decade ago, JB Perrette (right), president of Discovery Networks International, tells TBI.
“When we said ‘free-to-air’, a lot of people and our distributors, with good reason, asked, ‘how can you do that when you are involved in pay TV?’ Lo and behold, ten years later we’re the third-largest free-to-air broadcaster in Italy and we have free to air channels in Germany, Spain, the UK and Scandinavia. And guess what, we’ve been able to do it in a smart way that ultimately allows us to differentiate our pay channels, by cleverly windowing content or investing in different content for free-to-air.”
Mindful then of the reaction of its pay TV operator partners to going direct-to-consumer – in a nutshell it is the sum of all of their worst cord-cutting nightmares – Dplay’s new Nordic service will have a raft of content from the SBS free TV offerings. In Italy, where Discovery has carved out a position as a leading free-TV broadcaster, Dplay will be ad-supported and have content from free TV channels Real Time and DMax.
There will be some Discovery fare, including reality staple Deadliest Catch, but free channels will provide the bulk, meaning Discovery can have an OTT service that does not threaten to cannibalise its pay TV operations.
“It’s not in our best interest that OTT undermines the pay TV business, so we’re evolving it in a way that we think, based on pricing, the way it is packaged and access, that enables it to exist in a multi-model ecosystem: pay TV, free TV, OTT,” says Perrette.
Competiton is fierce, however. The impact Netflix has had is clear and although it has built its service largely with scripted programming, it is starting to make large bets on factual content. The likes of XiveTV and Discovery founder John Hendricks’s CuriosityStream service are also taking docs into the digital and streaming realm.
Discovery, one of the biggest owners of doc programming in the world, will not be going head to head with XiveTV and Curiosity, however, with a line up pulled largely from its growing range of free TV offerings.
Dplay does however carry the ‘D’ from the predominantly pay TV ‘Discovery’ and the fact it is an OTT service gives its parent an additional distribution option. In markets such as Romania where the Discovery channels are off the RCS & RDS platform after protracted and unsuccessful carriage talks, OTT offers another route to market.
Discovery is pushing hard for affiliate fee hikes from the pay TV operators that carry its channels, and the launch (or not) of Dplay will surely strengthen its hand in carriage deal discussions.
Discovery CEO David Zaslav is clear that operators will need to pay more for Discovery’s bouquet moving forward, and international boss Perrette is already implementing that strategy. “JB and his team are pushing harder on price,” Zaslav says. “As deals come up, we will fight not only for broader carriage of our channels, but for higher pricing.”
In Scandinavia, the SBS channels group, which is rebranding under the Discovery Networks moniker, already had catch-up services. Dplay assembles these under a single, new brand. It will be available over-the-top and on connected devices via a dedicated app.
Pricing details are thin on the ground ahead of the full commercial launch later in the summer, but the Norwegian version, which was the first to launch last March, is priced at NOK79 per month (US$10.26) or NOK759 for a yearly sub.
At launch Dplay will run on PCs and Macs with Andoid, iOS and connected TV functionality coming later in 2015.
In Sweden and Denmark the service is in beta mode, and is being tested with existing Discovery pay TV customers. The full launch comes later this year and is expected to offer an ad-supported free live TV and seven-day catch-up service, as well as an ad-free SVOD offer, much like Hulu and Hulu Plus in the US – a service Perrette played a hand in launching.
Dplay will also expand to other markets, but where and when is not yet clear. “The markets where we have biggest share and scale, Scandinavia and Italy, were the obvious ones, and we’re evaluating what would make sense in other markets,” says Perrette.
The DNI boss adds that how the million customers it is targeting come – whether through Dplay or Eurosport’s relaunched OTT service – is immaterial. “We’re indifferent, we just want to see them both grow. With Dplay in the Nordics, we haven’t even put our foot on gas. We’ve literally just got product out, it will take six to twelve months to see what our entitlement is.”
Fox International Channels and A+E Networks have made OTT moves in Asia, taking channels and content from pay to direct-to-consumer streaming, but Zaslav maintains Discovery’s million customer OTT push makes it the most aggressive channel operator in the space.
“We are the only media company going direct to consumer across a mass of territories,” Zaslav says. “We are fully committed to Europe; we said a few years ago it is the new emerging market [for us] and we have invested billions of dollars and grown market share. Now, we are going direct to consumer, and have over 300,000 signed up.
“We have started our initiative, ‘March to a Million’, and our drive over the next eighteen months is to have a million subscribers to our direct-to-consumer platforms. I think that is just the beginning.”
Eurosport signs a new player
Eurosport is relaunching its Eurosport Player OTT service as (new) parent company Discovery embarks on a drive for one million OTT customers internationally.
Paris-based Eurosport will also start to compete for a wider range of exclusive rights as part of a four-point plan unveiled by chief executive Peter Hutton (below).
“The challenge now is to take that fantastic heritage and tradition and make it more locally relevant, and take Eurosport into biggest sports events in every market.
“We been set a challenge of strengthening four key areas: programming, production, promotion and platforms.”
On the programming side, Eurosport will push more aggressively for exclusive and locally relevant rights. “We have to secure more exclusive rights,” Hutton said. “Traditionally, Eurosport has shared a lot with national broadcasters; we have to become the home of exclusive rights and have to make our channels more local, scheduled for local audiences and about local stories.”
The channel operator has snagged a raft of rights in recent weeks including Wimbledon tennis rights in Belgium, Europa League football in Scandinavia and Singapore and PGA golf in Norway.
Meanwhile, the relaunch of the Eurosport Player feeds into the wider Discovery OTT strategy. Hutton says. “It now has much more than just the channel, with highlights, stats, different camera angles – it takes you deeper into a sports event.
“OTT and delivering content direct to viewers is clearly a big part of Eurosport and Discovery’s future, and it is great to have a first mover advantage with Eurosport Player.”
At Eurosport’s recent Paris event, which was held at the Roland Garros stadium during the French Open tennis, new channel Eurosport Denmark was announced.
It will replace Canal 8, which Discovery recently bought from Scandi-based pay TV operator C More.
Discovery’s investor base, meanwhile, is widening to encompass more non-US entities, but explaining the reach and legacy of the Eurosport brand to the core US investors is a challenge.
That is one reason it is often described to US investors as the ‘ESPN of Europe’ (although is considerably more successful than ESPN ever has been in Europe).
“We have more international investors than ever, and we’re tapping into the fact that more than 50% of our business is now outside of the United States,” says DNI president JB Perrette. “We want to talk to an investor base that looks more like our portfolio.”
The Eurosport brand will remain in place for the foreseeable future, and with a revamped OTT offering, wider range of rights and more locally-specific channels, Discovery hopes its US$1.2 billion acquisition will play a big part in its drive for one million OTT customers.