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State of the Screens

Welcome To The Jungle: Discovery Betting On New Streaming Service

By December 10, 2020No Comments

Big news: Discovery released details on their upcoming DTC streaming service.

Key details for Discovery+:

1) Launching on 01/14/2021 in 25 countries
2) 55K episodes from 2.5K shows
3) 50 new original series
Discovery+ channels include:

1) Animal Planet
2) Discovery Channel
3) Food Network
4) TLC

Big question #1: What is the business model for Discovery+?

Quick answer: Subscription base with ad and ad-free offering.
Monthly pricing tiers for Discovery+:

1) Ad-free – $7
2) Ad-supported – $5

Big question #2: How do the economics compare to linear?

Monthly ARPU for Discovery:

1) Discovery+ (ad-supported) – $9
2) Discovery+ (ad-free) – $7
3) Discovery linear (ad-supported) – $7

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Big question #3: What are Discovery+ ad CPMs going to look like?

Quick answer: Discovery is estimating that addressable ads on Discovery+ will have 3X higher CPMs!

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Flashback: This was the exact point I made during my keynote at RampUp 2019 in NYC.  The gain in CPMs (win for network) from making the ad addressable (win for the marketer) could lead to higher revenue (win for network) even with a lower ad load (win for the consumer).

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Quick math on the advertising model for Discovery+:
1) 
Ad minutes/hour – 5
2) 
30s spots/hour – 10
3) Ad revenue/user/month – ≈ $4.00
4) CPM $ –  $80
5) $/spot – $0.08
6) Spots/month – 50
7) The service hits revenue target at 5 hours/viewer/month

Video: Discovery CEO David Zaslav explains the future of streaming platforms

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Michael Beach

Michael Beach

Michael Beach is the Chief Executive Officer of Cross Screen Media, a media analytics and software company that enables marketers to plan, activate, and measure CTV and linear TV at the local level. Michael is also the founder and editor of State of the Screens, a weekly newsletter focused on video advertising that is a must-read for thought leaders in the advertising industry. He has appeared in such publications as PBS Frontline, The Wall Street Journal, The New York Times, Axios, CNBC and Bloomberg, and on NPR’s Planet Money podcast.

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