Discovery Counts 15 Million Total Streaming Subscribers as Discovery+ Rollout Continues

The debut of Discovery+ early this year has significantly bulked up Discovery’s total subscriber count. Since the end of 2020, the entertainment company, which is looking to level its linear business with a push into streaming, has added about 10 million new paying streaming subscribers across its portfolio. In total, Discovery had 13 million total paying direct-to-consumer subscribers globally at the end of the first quarter. Growth is continuing at a rapid pace: As of Wednesday, the company had a combined 15 million subscribers, driven primarily by Discovery+ subscriber growth. “So far in 2021, [our strategy] is all coalescing and exceeding all of our early benchmarks across almost every KPI,” CEO David Zaslav told investors Wednesday morning. “We are pleased to report that just four months in our U.S. launch of Discovery+, and with the vast majority of our international expansion ahead of us, we have 15 million total paying subs across our global direct-to-consumer base, and we continue to move forward with strong momentum.” While the company did not spin out the number of subscribers to Discovery+ specifically, executives did share other statistics about how paying customers are using the lifestyle-heavy streaming service, which debuted Jan. 4. Viewing subscribers spend an average of three hours daily streaming programming on Discovery+, Zaslav said, and the company’s “ad-lite” tier, which costs customers $4.99 a month and comes with four minutes of advertising per hour, is bringing in an average of $10 in revenue per user—much higher than the company first modeled and well ahead of the company’s long-term growth goals. (Internationally, ARPU is about half that.) 'Ad-lite' a breakout hit “We look at ‘ad-lite’ as a breakout hit,” Zaslav said of the company’s ad-supported tier, which offers traditional ad breaks as well as binge ads and pause ads. “Here we are trending well over $10 [ARPU] and as we get bigger, it’s continuing to grow.” Between 80% and 85% of free trials to the service convert to paying memberships, and about 90% of subscribers have kept their subscriptions up for longer than one month. The company expects churn to trend down to the low single digits in the the next 12 months, said Discovery chief financial officer Gunnar Wiedenfels. The domestic audience on Discovery+ is about 15 years younger on average than its linear properties, and about half of the service’s subscriber base is not reachable on traditional cable, allowing the company to demand higher CPMs from marketers, Zaslav said. With the success of the ad-supported tier, the company will lean further into it and promote the tier more heavily to customers in the U.S. and around the world. Zaslav said that Discovery+ originals and its hit franchise shows, including Chip and Joanna Gaines’ Fixer Upper and franchises like 90 Day Fiancé, are leading the pack in terms of popularity on the service. With that said, though, those top titles only make up about 10% of total viewership, an indicator that customers are interested in the variety of programming the service’s library has to offer. “We don’t have one hit show or one hit movie, but as a result of that, we are seeing much lower churn than our peers, and usage is a lot more,” Zaslav said. “That is generating real economics for us on the advertising side, which is surprising us.” Pushing for upfront CPM growth The early figures for Discovery+ come ahead of a busy upfront season, during which entertainment companies will be hawking their bulked-up streaming wares as marketers seek out elusive audiences that are unreachable on traditional television. As Discovery+ reaches a scale that is valuable to advertisers, executives expect to be able to drive those CPMs even higher. “The broadcasters have been getting $60-plus [per CPM], and we’ve been getting less than half that. And now all of a sudden, we are really making progress in booking significant dollars in the $40s, high $40s and even $50,” Zaslav said. Discovery executives are hopeful that continued industry trends away from advertising and toward ad-free streaming will also help shore up the company’s advertising business in the streaming world. “Premium online video inventory is scarce in the first place, because a lot of the viewership is happening on ad-free platforms,” said Jean-Briac "JB" Perrette, the president and CEO of Discovery International. “That drives super-high demand and a hot market environment right now. And we are still in the early innings from the perspective of our product offering toward advertising.” Read Next: Discovery Prepares for ‘Company-vs.-Company Combat’ as Discovery+ Debuts