Discovery vs TVNZ: Who will jump first in the paid streaming wars in 2022?

OPINION:

Discovery NZ boss Glen Kyne is adamant that his company will soon offer a paid streaming service in the local market.

He wouldn’t provide launch details as part of Discovery’s 2020 showcase, but he made no secret of his intentions.

“There’ll be announcements in the new year,” he told the Herald today.

“But when you think about viewers and content, we want to be in all territories. We want to be in linear, we want to be on paid TV, we want to be in ad-funded streaming and we want to be in paid streaming.”

This is not the first time a local television boss has outlined intentions to enter the paid streaming scene.

As far back as 2018 TVNZ chief executive Kevin Kenrick said that the company was looking into paid options in terms of what it offers viewers.

Nothing has yet come to fruition, but Kenrick hasn’t jettisoned the idea completely over this prolonged three-year gestation.

In an interview earlier this year, he confirmed to the Herald that TVNZ was looking into a range of options, including a paid service that would offer ad-free viewing. Other options on the cards included a pay-per-view service that could see viewers pay only for live-streamed events. This would likely be a sports play, which would also remain attractive to advertisers looking to bask in that halftime glow.

While the wait goes on, 2022 looks set to be the year when New Zealand broadcasters hit go on their plans to offer paid services.

This is many ways reminiscent of the pre-paywall era in news media, when everyone was speculating on whether the Herald or Stuff (then owned by Fairfax NZ) would take the plunge first – a conversation that ultimately ended in 2019 when the Herald launched its premium service.

Discovery has already been setting the stage for the launch of DiscoveryPlus in this market, most clearly indicated by its revised content deal with Sky TV earlier this year.

While Sky did retain exclusive TV rights to Discovery’s stable of channels, it lost exclusivity for streamed content – giving Discovery the leverage to launch a service in the local market in a similar vein to DisneyPlus.

Kyne told the Herald that DiscoveryPlus already has around 20 million subscribers around the world.

This is an impressive number viewed in the context of a country with a population of five million people but also reveals how niche the streaming service is compared with its competitors in this space.

For comparison, Netflix reported in the third quarter that it currently has 213.6 million subscribers around the world. DisneyPlus meanwhile has more than 116 million subscribers.

That said, it is still early days for DiscoveryPlus and the company is yet to roll out in many regions around the globe. There’s also the fact Discovery is on track to close a merger deal with WarnerMedia in the first half of next year, which will arm the company with a massive war chest of content.

In the interim, however, even a business as hefty as Discovery has to play a local game if it is to generate enough revenue in this market.

This means retaining ad-funded content, while it simultaneously builds its digital offering.

The corollary here is that the age of ad-funded streaming and television services isn’t likely to end any time soon. Both Discovery and TVNZ are investing in linear television and their free streaming services, because these remain the best way to make money in local broadcasting.

It might have sounded surprising today for Discovery to announce to new linear television brands in the local market, but as Kyne explained: “The future is increasingly digital, but having a funnel of a really large linear audience lets you promote your plans for a digital future to many viewers.”

A broader spread of viewers simply gives Discovery greater scope to nudge people in the direction of its paid television option. The idea is not to convert everyone into a paying subscriber, but at least some of the loyal fans who simply can’t get enough of Discovery content.

The speed bump that all these efforts might face is the growing issue of streaming overload, in the sense that there are simply too many options now available on the market.

With Netflix, Neon, Apple TV, Amazon Prime, Spotify Premium, DisneyPlus, YouTube Red, Twitter Blue, Xbox, Playstation and whatever else is available, your subscription bill can quickly escalate.

There’s the psychological effect of decision paralysis, which makes it difficult for people to choose when there are simply too many options on offer.

As the industry continues to mature and new services become available, the danger here is that consumers eventually won’t have the time or capacity to subscribe to yet another niche service.

There are only so many potential media minutes available in a day. And the question now is whether anyone has the time or the appetite to fit in what TVNZ or Discovery might have to offer.

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