Discovery’s CEO eyes free option as streaming strategy takes shape
Zaslav’s new approach would be similar to what Comcast Corp. is doing with its Peacock streaming service.
With his company set to merge with WarnerMedia, David Zaslav added a new wrinkle to the combined company’s streaming strategy: a free option.
Discovery Inc.’s CEO said the merged company, to be called Warner Bros. Discovery, would eventually offer a single streaming service with three “funnels.” The most expensive tier would be commercial-free, a less expensive tier would include some commercials, and a third tier would be free and come with different programming.
The free tier would be a way to reach more people and make use of a library of shows and movies that paying customers aren’t watching much, Zaslav said on an earnings call Thursday.
“Our objective is to reach everybody,” he said.
Currently, both Discovery, which owns the Discovery+ streaming service, and AT&T Inc.’s WarnerMedia, which owns HBO Max, offer two streaming choices: one with ads and one without. Neither has a free option.
Zaslav’s new approach would be similar to what Comcast Corp. is doing with its Peacock streaming service, which has a free option in addition to ones that charge a monthly subscription fee.
“There’s a load of people that will never pay for television, but they can go to and view this content and that’ll be advertiser-supported,” Zaslav said. “I think there are a number of players that are very tied to this idea of subscription-only.”
Zaslav’s comments came as Netflix Inc. recently reported its slowest year of growth since 2015, raising questions about how many people around the world are willing to pay for online entertainment.
Discovery shares were down 3.9% to $27.11 as of 10:48 a.m. New York time Thursday after reporting fourth-quarter earnings that missed Wall Street projections. The company added 2 million streaming subscribers in the quarter, which analysts said was below their expectations.
On the earnings call, Discovery executives said they expect the WarnerMedia deal to close early in the second quarter.