Discovery passes 15m D2C subs, looks to AdLite version of discovery+ for growth

Discovery now has over 15 million paying direct-to-consumer subscribers, four months after the launch of discovery+, its new global streaming service.

David Zaslav

Speaking to analysts after the company posted its Q1 numbers, CEO David Zaslav highlighted the milestone and noted that discovery+ still had “the vast majority of our international expansion still ahead of us”.

Zaslav said that Discovery added 10 million paying subs since the end of last year, and added that between 80% and 85% of free trialists had been converted to paying for the service.

Zaslav said that the version of the product that costs US$4.99 with a small amount commercial time per hour had generated US$10 in ARPU, ahead of the company’s goals.

He said that Discovery would push the AdLite version as the core proposition, including internationally, where the company had previously been focused on an ad-free product.

Internationally, Zaslav highlighted the success of discovery+ in Italy, where there is low overall pay TV penetration and where the D2C service was generating ARPU three times greater than the company’s wholesale portfolio. He said the D2C offering could address a market 10 times greater than the pay TV base in that country, and highlighted “markets such as Brazil, Germany and Australia with similar characteristics and where our ability to offer a direct-to-consumer offering, packaged with mobile or multi-platform operators should ultimately result in new customers, higher ARPUs and a deeper direct connection with ARPU”.

He said that in markets werhe pay TV only had 20-30% penetration, there was a signficnat opportunity to expand the overall Discovery base through the D2C offering.

Zaslav was careful to iterate that Discovery’s traditional core lindar business was “of equivalent importance” as the “backgone of our strong free cash flow”.

Discovery posted revenues of US$2.792 billion for Q1, iup 4% on the strength onf US distribution revenues and international advertising revenues.

Adjusted OIBDA was US$837 million, down 25% on the back of increased marketing and content spend and currency impacts.