Discovery Eyes Market of 70 Million U.S. Homes for Discovery Plus Streaming Service

Discovery expects its forthcoming Discovery Plus streaming service will have an addressable market in the U.S. of at least 70 million homes — and at least 400 million households globally.

That’s based on the assumption that there are 300 million broadband-only homes in the United States and about 80 million pay-TV homes, Discovery CFO Gunnar Wiedenfels said in a presentation for investors.

“All of a sudden, with this product, we’re able to address a much, much larger global community here,” he said.

Wiedenfels said over the long term and “at scale,” Discovery Plus is expected to deliver margins of 20%. In the U.S., Discovery Plus will launch Jan. 4 with a monthly price of $4.99 with ads and $6.99 without ads.

Discovery’s average revenue per pay-TV household in the U.S. is $7 per month, Wiedenfels said, and “I’m very confident that, with our Discovery Plus product, we’re going to be able to achieve at least that same ARPU number — if not more — and that can be achieved even in the near term.”

In the U.S., Verizon is a key launch partner for Discovery Plus. The streaming service will be free for 12 months to the telco’s customers on select plans (available to new 5G Home Internet and Fios Gigabit subs, as well as new and existing wireless customers with a Play More or Get More Unlimited plan). For Disney Plus’ U.S. launch, Verizon had offered the service free for one year to all unlimited wireless subscribers.

In 2020, Discovery’s direct-to-consumer services will generate $800 million of revenue with losses from the investments in the streaming initiatives in the $500 million range, according to Wiedenfels. He declined to provide forecasts for 2021.

Currently, Discovery has 5.2 million streaming subscribers worldwide, up threefold from 2018.

All told, in the U.S., Discovery Plus will offer more than 55,000 episodes from Discovery’s channels (including Discovery Channel, TLC, Food Network, HGTV and Animal Planet) as well as the BBC’s Natural History collection, A&E Networks, Group Nine and originals including an exclusive first look at content from the Magnolia Network, the forthcoming multiplatform joint venture with Chip and Joanna Gaines.

Internationally, Discovery Plus launched with Sky in the U.K. and Ireland last month, as well as India. Sky is currently offering the service to its Sky Q customers for 12 months at no extra cost, and Discovery has a deal with TIM in Italy for its launch in the country in early 2021.

Overall, Discovery plans to launch the direct-to-consumer offering across more than 25 markets in 2021, including the Nordics, Italy, the Netherlands and Spain. Discovery Plus will also launch in Latin American markets, including a planned launch in Brazil, and in parts of Asia.

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