Discovery Executive Cautious about International OTT Deals

By | September 9, 2012 | IBC

Discovery Networks International will take a cautious approach to doing OTT deals internationally compared to what it has done in the United States. Mark Hollinger, president and CEO, Discovery Networks International told IBC E-Daily that it was unlikely to use the same approach that it has in its home market.
   “We have only had experience of this in the United States. We have done deals with NetFlix and Amazon in the United States, two big OTT providers," Hollinger said. "However, the United States has a unique set of circumstances. Those two businesses had well established subscriber bases in the United States. We were very late in the game in terms of doing deals with them. So, whatever impact OTT was going to have in the United States was already under way. Internationally, we are careful about looking at OTT deals, because we don’t want to put content out onto distribution platforms that may further undermine the growth of pay-TV. Internationally, we have looked at more opportunity for OTT like services and TV everywhere services with our pay-TV distribution partners, as opposed to doing deals with NetFlix and Lovefilm.”
   The broadcaster, which is one of the big commercial broadcast brands, is seeing opportunity across the board, and Hollinger highlighted Latin America is a hot market for the broadcaster right now. “In Latin America, we probably have the best and broadest pay-TV growth. We love that kind of growth. Brazil and Mexico are seeing great organic growth. We also have a region we call CEEMEA (Central & Eastern Europe, Middle East and Africa), which is also seeing some strong subscriber growth. There is less subscriber growth in Asia, but we are growing in markets like India with additional channel launches or the ongoing professionalization of the industry, the consolidation of operators etc,” he says. “In Western Europe, over the past year, our growth story has been about a number of FTA channels we have launched in mature markets where pay-TV has started to stall. We launched two FTA channels in Italy — one in the last year, one in Spain, and one in Germany. Growth comes from everywhere. But, if you look purely at the numbers, Latin America is number one.”
   Discovery was also one the early pioneers of 3-D TV broadcasts in the United States. Internationally, it appears unlikely the broadcaster will launch any standalone 3-D TV channels, although Hollinger denied that 3-D TV had been a disappointment to the company. He adds, “I would say on the international side, our expectations were that this was going to be a slower type of build than HD was. We needed to have more of a longer term perspective. Internationally, we have not launched 3-D TV channels. We have supplied 3-D content to our operator partners for 3-D TV on demand. Our programming works naturally on 3-D TV. I would say it is not rolling out quickly, but we were not anticipating it to roll out quickly. I would not call it disappointing.”
   From a business perspective, the key for the broadcaster is still working on the regulatory side so it can generate the revenues in some markets that it feels it is entitled too. “We have more regulatory challenges internationally than we do in the United States. In a lot of markets internationally, pay-TV does not get its fair share of the ad sales market based on its share of viewing. There will be a moment where there will be a tipping point and that will start to happen. But, pay-TV is still under-represented in some of the ad markets. The other big question is whether pay-TV is going to mature more quickly in some markets than others,” adds Hollnger. 

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