The Discovery Channel lineup epitomizes differentiation at low cost
The core of blue ocean strategy involves thinking about higher value and low cost, rejecting the idea that higher cost equates to higher value. While it’s common to evaluate value in terms of efficiency gains, many blue ocean offerings are simply fun. For example, the Nintendo Wii, Cirque du Soleil, casual games, Marvel movies, and Yellowtail wine might not do much to help at the office (especially Yellowtail) but they’re profitable and often beloved businesses because they’re fun. This post examines another entertainment business, Discovery Plus.
In a prior life, I worked with a lot of reporters trying to unravel the financial crisis. One of those was an award-winning assistant producer of 60 Minutes, the pinnacle of American news television. We spent a few days together while I introduced him to the people and processes related to the foreclosure crisis.
When we weren’t in court with me whispering who was who and what was happening, we spent a fair amount of time talking. One of my questions was how does one become a leading TV news producer? It’s not one of those jobs you apply for from an advertisement.
Apparently, he was always interested in TV & film and got a job with a low (low, low) budget production doing TV crime reenactments. How low was the budget? Low enough that in at least one episode he had to come from behind the camera to the front and play the perpetrator crouched in a stairwell with the gun. Look left, look right, be dodgy then run away (back to being a producer).
The list of serious awards that 60 Minutes has won is long enough it takes a noticeable amount of time to load in a web browser. While not exactly the same high-brow media, the Discovery material is informative and arguably more fun. Why? There are lots of visual learners who’d rather watch a reenactment on TV than read about one. Also, lots of people who want something brainless to stream while washing dishes.
Discovery tends to focus on biopics, documentaries, cooking shows, and reality. I worked with the people who created Marvel Studios to transform my award-winning case study into a biopic, a project that is quickly morphing into a possible TV series. Why, besides that it’s a great story and something to do while locked down for COVID? Because I love biopics and so do my wife and daughter. They are, by far, our favorite stuff to watch.
Cooking shows come second; who doesn’t like a cooking show? And, finally, certain types of reality TV (think goofy challenges, like Naked & Afraid, and not sadistic prison survival shows like 60 Days In or highly scripted like The Apprentice). Granted, we’re more likely than not to read the news on our iPad’s, play a casual game, or catch up on a Facebook news feed while these shows play in the background. That’s OK - even the people who create these forms of media don’t expect laser-like focus.
We’re Americans living in France; we came here because of INSEAD, where I work as an Institute Executive Fellow at the Blue Ocean Strategy Institute. One thing we missed after moving, especially my wife, was the never-ending stream of crime biopics Discovery’s ID Channel offered up. Apparently, she’s not the only one; Discovery ID is the #2 ad-supported channel among women. France has great bread, awesome healthcare, good schools, and a deep love of life and the land but no ID Channel.
Therefore, I perked up when I found that Discovery is starting a streaming service that includes the ID Channel and lots more. Granted, it’s not available here in France yet but, I’m hoping, soon enough.
As I mentioned, I work a lot with entertainment companies and, reading the press releases and articles, realized Discovery itself is an underappreciated blue ocean network.
Specifically, Discovery uses the term “casual viewing” to describe their audience. Those who’ve been following my work or other blue ocean material will note that sounds a lot like the blue ocean category “casual gaming” pioneered by Nintendo and adopted by, well, everybody else.
Casual viewers read the news, play games, cook dinner, and do whatever else they do while vaguely watching a TV show. Media expert Brian Wieser referred to it as “ambient or genre-based viewing — something to watch when the viewer doesn’t want to watch anything in particular.”
Remember that a benchmark identifier of a value innovation offering, the core of blue ocean strategy, is differentiation and low cost. This is exactly what Discovery is offering. I don’t know the price but can’t imagine Naked & Afraid, How It’s Made, or Guy Fieri’s content is especially expensive to produce. Some of the shows look like they could be filmed and edited with a smartphone. Despite that, they are both popular and different. I love watching The Crown but the $260 million production cost is admittedly pricey and the finished show isn’t the type of thing you fall asleep to.
Media pundits question whether Discovery has a defensible position. Can they survive an expected onslaught from Netflix, Amazon, Disney, and everybody else? The truth is the rest of the offerings, the competitors, are largely irrelevant. The Discovery lineup is about brainless fun. Netflix and all the rest are likely to offer up some of their own but they’ll never catch up to the King of Stupid … Discovery.
Marvel famously relies on its characters to anchor its media offerings rather than relying on stars. Sure, there are movie and TV stars in Marvel movies and shows but they’re usually working for less than the normal price (well, they were when the studio first was created).
Similar to Marvel, Discovery relies on its own brand of brainless fun as the core of its offering and not any individual person. Sorry to break the news to Guy Fieri but if he quit tomorrow they could easily replace him with somebody similar and most of the audience wouldn’t even notice much less object. The brand and style of Discovery shows differentiates and attracts viewers, not the individual television personalities. Discovery’s ubiquitous reality-style TV programming is a fine example of lower cost and higher value (again, with value described as entertainment value).
Will audience members pay $5 with ads or $7 without to stream endless episodes? I will as soon as I can and suspect lots of others feel the same. Discovery Plus is priced slightly less than Spotify because it’s essentially the same service, high-quality background noise, albeit without literal or figurative expensive rock stars. Something to listen to or watch while doing dishes, gaming, or falling asleep. Where Netflix will ask “Are you still watching?” Discovery Plus might ask “Were you ever watching?”
There’s no need for Discovery to create big-name stars or shows. In fact, stars and expensively produced shows would probably detract from their core offering. Nobody tunes into the Discovery lineup to actually pay attention. Spending the money to create shows that required much thought would be wasted money on the part of the network.
The benchmark of a blue ocean offering is low-cost/high value, with value defined as what buyers believe to be valuable: high-school civics teachers needn’t necessarily agree. By that standard, Discovery has unlocked a classic blue ocean move.
On Feb. 13, 2021, Discovery announced a merger with AT&T’s WarnerMedia, with Discovery and Warner being spun off into a new company called Warner Bros. Discovery and led by current Discovery CEO David Zaslav. As part of due diligence, Discovery has projected revenue will rise from $28.2 billion in 2020 to $45 billion in 2025.