Vindicia in the News

When assessing business deals, Henry Ford supposedly used to ask, “What’s in it for me?” to determine whether an idea made sense.

When it comes to the new streaming partnership announced by the Discovery Channel and Verizon this week, subscription industry experts say it looks like a win-win.

“I think the important thing [to ask] is if Discovery is working with the right partner,” Sharath Dorbala, CEO of the subscription management platform Vindicia, told PYMNTS.  “I think it’s a brilliant move.:”

By aligning with Verizon, Dorbala said Discovery gets a captive subscriber base of more than 100 million, and follows a rollout path already blazed by Disney and the NFL Network.

As for Verizon’s side of the deal, which will provide its massive mobile user base with a free year of Discovery+ shows to stream, Dorbala said that also makes sense.

“The telecoms are increasingly partnering with the content providers because they need a way to showcase their 5G networks,” he explained. “It's a great way to showcase high-quality HD and 4K content streaming onto people's devices, so I think it's a match made in heaven for them.”

Heaven and hell

Media content and high-speed telecom are both hot industries right now, but Dorbala said not every streaming deal will succeed.

“Just because something is offered for free [or at a very low price] doesn't mean people will sign up and start using it. That's what Quibi taught us,” Dorbala said of billionaire media mogul Jeffrey Katzenberg’s deep-pocketed startup that folded in under a year.

“It comes down to: Is your content good enough? Is it attractive enough to keep customers?” he added. “I can tell you, for Discovery, it's going to be about customer acquisition.”

As long as Verizon helps Discovery acquire new customers and customer data, Dorbala said it will be a matter of figuring out how to monetize those relationships, noting that they have lots of time to do it.

“Once that is done for the first one year, it's going to be about retention and extending customer lifetime value,” Dorbala said, reiterating his theme of the year: “Retention is the new growth in subscriptions.”

Retain, Retain, Retain

At a time when “try a week for free” content offers are a dime a dozen, Dorbala said Discovery’s year-long plan gives them lots of room to work.

“Compare one week with 52 weeks: I think it's a pretty ample time. If you haven’t figured out a customer acquisition strategy in one year, that's a very different problem to solve,” he pointed out.

He believes that Discovery, like any other company trying to build a base of new subscribers, would be wise to focus on delivering value, convenience, flexibility and empathy, to show that they are “in tune with consumer expectations”.

For example, that might mean making it easy for customers to pause their subscriptions if they want to take a break but not quit.

“Especially in times like COVID, where everybody feels their wallet is pinched,” Dorbala noted.

Because Discovery already has the luxury of owning a huge library of excellent content, as well as a giant and loyal TV audience, Dorbala said the key value proposition will lie in connecting with new users.

“The content is fantastic. They already know they have a consumer base from Nielsen ratings,” he said. “Now they just have to expand it a lot more.”