Discovery’s streaming service Discovery+ has surprised management with better-than-expected subscriber retention and usage, the media company’s CEO David Zaslav said on Wednesday. But he also criticized TV ratings measurement firm Nielsen.
Asked about the streaming upside surprises so far, he told the MoffettNathanson Media & Communications Virtual Summit that Discovery+ had “low churn, very high usage, and … people like the library.”
Zaslav also said the firm would strike more deals with pay TV giants to distribute the streamer, such as a recent agreement with Comcast. He compared these partners to “fishing boats” for the service.
Addressing one early problem that the firm has started to overcome was that marketing spending for Discovery+ wasn’t always effective in the early days. “A lot of the spend in the first quarter was not as efficient as we would like, but that’s expected, we are promoting everywhere,” he said.
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How does Discovery decide whether to put content on its cable networks or streaming services? Zaslav said, “we are learning and trying,” adding: “There is a whole category of content that we wouldn’t do for our channels.”
And Zaslav shared: “Documentaries are doing extremely well,” along with “edgier content” and some exclusive streaming-only content like BBC natural content programming. For example, Discovery+ the other day launched Queen of Meth, he noted. The company is “investing more in linear than we ever have,” the exec stated.
TV ratings company Nielsen needs “to get [its] act together” to provide accurate ratings data instead of a “dog and pony show” and “this antiquated system,” Zaslav said during his appearance. “It’s really unfortunate.” He added that a suspected undercounting of viewers for a year during the coronavirus pandemic was good for advertisers, but bad for media companies. “How do we get that money back!?” he said. TV companies have criticized Nielsen for relying on a smaller consumer panel for its measurements in the pandemic, saying that has significantly undercounted viewers.
Discovery said on April 28 that it had reached 15 million paying subscribers worldwide to its direct-to-consumer services, including Discovery+.
Discovery+ launched in the U.S. on Jan. 4 with a monthly price of $4.99 with ads and $6.99 without ads, and has also announced deals for an international rollout.
In the U.S., the streamer launched on digital gateways like Roku and Amazon Fire TV, and Zaslav has hinted at coming U.S. cable TV operator distribution partnerships to further accelerate domestic subscriber growth.
In its recent earnings report, the company also reported that Discovery also reported that its U.S. advertising revenue in the first quarter fell 4 percent compared with the year-ago period, but U.S. distribution revenue rose in the double-digit percentage range thanks to Discovery+ and higher carriage fees.
On the earnings conference call, Zaslav had said the direct-to-consumer strategy’s execution has been “nearly flawless” and touted its upside potential. For example, he said the streaming business still had much of the Discovery+ expansion into international markets ahead, strengthening management’s conviction it was a key growth business adding to the core linear networks operations.
