Discovery in 2020
The Discovery Channel, along with many other different cable networks, has had a difficult 2020 in terms of creating new content and keeping viewers watching. These difficulties have reflected heavily in their revenues as well. In 2019, Discovery generated $11.14 billion in annual revenue, a 5.6% increase from 2018. 2019 was a part of a series of at least three years where the channel’s revenues continually outpaced the previous year, with 2018 being the major standout with an impressive 53.34% increase in revenue from the year before. However, this streak of increased revenue met a hard stop in 2020, with the most recent quarterly report at the end of June showing Discovery generating only $2.54 billion. The report is a steep decline of 11.92% from the same quarter in 2019. The gross profits of Discovery dropped a very similar amount during this quarter, clocking in at 11.09% less than the year before.
A major issue in Discovery’s business model is still relying heavily on their revenue streams coming directly from cable television. In 2018, Discovery acquired Scripps Network Interactive, which owns other channels such as HGTV, Food Network, and the Travel Channel, among others. The company currently owns over 20 different lifestyle channels that host mostly non-scripted content, which is significantly cheaper to produce. The addition of this cost-effective content resulted in initial gains from Discovery, with five of their channels ranking in the top 14 highest-rated shows on cable primetime. However, with their recent drop in revenue, Discovery needed to find new ways to build audience engagement and look to the future with cable no longer being a viable and consistent revenue stream in the long term.
Discovery+ — What Is Known So Far
Discovery+ is the company’s answer to slagging revenues in 2020 and will be the official streaming service for the Discovery Channel and, presumably, its entire catalog of properties. This could be a massive platform considering the extensive logs of popular programming across the many different owned properties that would become fully available under one singular streaming service. While the official release date is still unclear, it has been confirmed that Discovery+ will be released sometime in early 2021.
Discovery+ will also have two different tiers for their subscriptions as well. There will be an ad-free version of the service for a higher monthly price and a lower-cost version with built-in ads. The maximum ad time will cap out at 5 minutes during any single program that is streamed. Currently, the prices of either tier are still unknown to the public.
Discovery is entering the streaming market during a period of time when it has never been more popular. With the increase of audiences staying home due to the COVID-19 pandemic, streaming video was up by 74% in comparison to the same quarter in 2019. Discovery+ has already launched an app on Amazon Fire TV.
Discovery+ comes at a time when content streaming is quickly transitioning to be delivered in the way audiences prefer these days. Discovery has a massive opportunity to take their incredibly widespread cable viewership and move them to a direct payment system instead of relying more on ad revenue based on ratings and cable network deals. With a large library of lifestyle programs available on top of the Discovery Channel’s own library of shows, for the right price, Discovery+ could easily become a very popular service in an already crowded market.
About the Author
Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.