Discovery passed 20 million direct subscribers in the third quarter of 2021, an increase of 3 million in three months. They contributed $425 million of what the company calls next generation revenues, which is twice as much in the same period the previous year. Discovery is preparing a proposed merger with the WarnerMedia business of AT&T.
Discovery defines direct to consumer subscribers as including those through wholesale arrangements in which it receives a fee for the distribution of its online services, as well as subscriptions provided directly or through third-party platforms, joint venture partners and affiliates parties. It does not include those on free trials.
Its next generation revenues include direct-to-consumer products, as well as revenues from TV Everywhere, Go applications and other digital properties.
Total revenue for the third quarter of 2021 was $3.15 billion, which was up 23% on the same period the previous year. So next generation revenues contributed 13.5% of the total.
David Zaslav, the chief executive of Discovery, is looking forward to the pending merger with WarnerMedia, “combining iconic and globally cherished franchises and brands, and positioning us to more efficiently drive global scale across the combined portfolio.”
In the United States, Discovery estimates that less than half of discovery+ subscribers also subscribe to HBO Max, which it believes presents an opportunity to broaden the base of their combined offering.
The company is planning to market an ‘Ad Lite’ offering in the United States and subsequently international markets.
The chief executive of Discovery is careful not to dismiss traditional television. “I saw a lot of people in the mid-’90s saying that it’s the end of broadcast television. It may be a transition away from a lot of the younger demo being on there, but we see huge numbers.” He said: “I think that the linear platform is here for quite a long time.”