Although limited advertising on premium streaming services would seem like a hindrance when it comes to growth of the business, David Zaslav, president and chief executive officer of Warner Bros. Discovery, believes it can be a sustainable growth business -- and, he predicts, more media companies will jump in.
This comes as two other major companies' streaming services recently said they would look to offer advertising options for their respective services: Disney+ and Netflix.
Zaslav, speaking during the company's first-quarter earnings call, said that others will join in quickly and over the next couple of years "will be [getting] into the streaming ad-light business."
Zaslav believes Warner Bros. Discovery will have a strong advantage in its overall global advertising operation -- particularly on the international front. “We're the ones that were out there very early saying ad-light looks really compelling, because it's a great consumer proposition.”
He adds: “Many will not have the infrastructure of teams locally on the ground or the ability to package all the channels or free-to-air channels in markets across Europe, together with that type of inventory.”
Some analysts worry that some limited advertising streaming platforms may not yield big revenue growth. Zaslav says discovery+ is generating $5, $6 in incremental revenue due to its limited advertising on discovery+.
“As it scaled we started to make more,” he said. “We said very early on, we're going to switch to offer consumers what they want, a lower-priced opportunity with a small amount of advertising.”
Zaslav said: “Remember broadcast for a period of 20 years was declining and CPMs were increasing. I was at NBC in the mid-'90s when [executives] were saying this can't continue [that] we can't have smaller and smaller audiences and make more and more money... But it's almost 30 years later and the advertisers are still paying more than the [viewer] rate of decline."