Backing up industry-wide reasons for launching new premium streamers, Discovery says it is pulling in double the average revenue level per user for its streaming platform -- discovery+.
That's versus what it gets from its legacy pay TV distributors. And more so when advertising revenues are added.
Discovery+ -- which launched this January -- is earning $7 a month in average revenue per user (ARPU) for its ad-free option, says David Zaslav, president/CEO of Discovery Inc, in remarks made at a industry event on Wednesday.
Zaslav says this is double the $3 to $3.50 ARPU it gets from subscribers via its cable TV networks running on pay TV systems -- cable, satellite, telco or virtual. He says Discovery gets another $3 to $3.50 in advertising per user on pay TV platforms.
Adding in advertising to its streaming business puts Discovery “dramatically” higher than the $7 number-- 30% to 40% -- “more than double-digit” dollarss. He notes this is for discovery+'s limited-ad option for consumers. In addition, he says the “length of view” session of Discovery content is also longer on discovery+ at over three hours.
Long-term, Zaslav believes all this will help alleviate key industry pay TV disparity: Discovery gets 20% of the cable TV viewership, but only 7% of the revenues from pay TV distributors.
In this current cord-cutting environment, many cable TV networks have been hit with losses of 2% to 3% in subscribers per year. Zaslav says the streaming world provides a somewhat easier platform for adding subscribers.
He says if Discovery lost a million cable TV network subscribers, "all we have to do is pick up 650,000 [for discovery+] subs in order to be making more money."
Last month, discovery+ said it grew 15 million subscribers from an earlier 11 million subscriber level. Discovery’s collection of some 20 cable TV networks includes its top networks having around 80 million U.S. subscribers.
At a December investor presentation, Gunnar Wiedenfels, CFO of Discovery Inc., said the company sees discovery+ reaching a goal of 70 million U.S. subscribers.
In terms of current advertising measures for its legacy cable TV network, Zaslav says Discovery has been getting a $20 cost-per-thousand viewers (CPMs) among key demographic viewers from TV marketers versus the $60 CPM that broadcasters TV networks received.