Discovery is upping the ante in India. Leading the infotainment genre, the company has crafted three channel launches in India this year: Discovery Science, Discovery Turbo and Discovery HD. It has also introduced regional feeds for its flagship channel, Discovery.
While media companies across the world cut down on their costs due to a global economic downturn, Discovery continued with its annual expense of $1 billion on content. The idea: Discovery drives on premium content.
Japan, India and Australia are Discovery‘s top markets in the Asia Pacific region.
For expanding in India, Discovery is taking the organic route. Acquisitions are not on the agenda.
In an interview with Indiantelevision.com‘s Ashwin Pinto, Discovery Networks Asia Pacific executive VP, MD Tom Keaveny talks about the company‘s growth plans in the region.
Excerpts:
Could you give us an overview of the strategy that Discovery has followed to grow the business across the Asia Pacific region over the past couple of years?
Having local people run local markets is the first thing. I know that this sounds obvious but it is important to have Indians run the business in India. They know what people want, when they watch it and why they do not watch things.
Secondly, the local people schedule programming on channels according to viewer tastes and feedback; they also do localisation. In India, for instance, we launched feeds for Discovery in Tamil and Telugu this year.
Then there is content creation. It started a few years ago with The Great Indian Wedding on Discovery Travel and Living (now known as TLC). We also had Shah Rukh Khan Living With A Superstar, which also was a success in Malaysia. We do local content on the basis that it can be used in other markets.
In the US, there was a certain amount of re-organisation with a clear focus on being more cost efficient. What shape has this taken in the Asia Pacific region?
We have always been cost efficient. In a recession, you are forced to look at costs but the areas where we carried on investing was content and branding of channels. We spend $1 billion a year on content.
In India, the recession meant slower growth. Australia was having a mineral boom, and so there was ad sales growth. China grew. Japan has had inherent problems, but so much of our business here is based on distribution revenues that we were less affected.
What impact did the economic downturn have on your growth trajectory?
I won‘t say that we were not affected. However, other companies probably cut back more than us. We are seeing the benefits of continuing to invest in content.
For the second quarter Discovery reported increased ad revenue growth of 38 per cent for its international networks. Does this mean that the difficult economic climate is behind international broadcasters like Discovery or do challenges and difficulties remain?
Sales is a difficult job. But we have had ratings growth. Some of this ad revenue growth you mentioned has to do with the fact that last year was a lower base.
Do I think that we have seen the end of the downturn? Well, whatever happens economically, our audiences have grown. We have had a 27 per cent audience growth in India. This has been replicated across other Asian markets.
How much revenue comes from the Asia Pacific? Which are your top three markets?
Japan, India, Australia are our biggest markets. Malaysia and Taiwan come next. India is growing at a good rate. However, I cannot tell you how much revenue comes from the Asia Pacific.
‘With new channels coming in, you would expect to see cannibalisation. But that has not happened for us. With competition, the profile of the genre has got an uplift‘
To what extent has Discovery increased the number of feeds over the past year across Asia?
We have launched more feeds in Australia, Malaysia, Philippines. We are going into more languages. Demand is significant. The assumption is that if you launch more networks, audiences will go down. For us it has been the reverse. The more networks there are, the higher is our viewership.
Is fragmentation a worry for Discovery with international broadcasters launching channels in the movie, entertainment and infotainment space?
With new channels coming in, you would expect to see cannibalisation. But that has not happened for us. When we launched Discovery Science and Turbo around the world, we did not see Discovery Channel‘s audience dip. Instead it grew. With competition, the profile of the genre gets an uplift.
What impact do you see the three new channels having on the Indian infotainment landscape?
I can‘t think of a market in the world where Discovery Science will be better received. India is a technology hub. It is a young nation and there is a thirst for knowledge. So having a channel dedicated to science makes sense.
And Discovery Turbo can take encouragement from the fact that the automobile sector is seeing robust growth in India. But I also see it being important as a male lifestyle channel.
Recent research showed that there is still a degree of uncertainty about the benefits of HD for television viewing. How do you see HD as a value add?
Our content which includes natural history and wildlife fits into HD very well. We launched Discovery HD in Japan in 2005. It has only been in the past two to three years that other channels started investing in this technology. For us investing in technology is in our DNA. It is part of our psychological profile because it is a brand promise as well.
We have a future proof library. For example, Shah Rukh Khan Living With A Superstar was filmed in HD. Once viewers see HD, going back is a difficult proposition. But everybody has to work towards it. It cannot be just one or two networks that are doing the heavy lifting.
Have you done any research among the creme de la creme viewers to find out what they expect from a network like yours?
There is congruity in terms what viewers to want to watch. Travel and cooking are key genres. Shows that combine these genres like Anthony Bourdain also work well. Grooming shows also work. Shows like Man vs Wild, Deadliest Catch, Mythbusters work globally. At the same time, you do have to take into account local tastes.
A lot of focus has been given to Animal Planet over the past 18 months. The aim was to make the programming sharper, more edgy. Is this increased investment starting to pay dividends?
In the digital environment, it has been one of the fastest growing channels. There is a lot of co-viewing happening. We constantly look at the schedule, find out what works and attempt to be contemporary.
Are you satisfied with the joint venture relationship Discovery has with Multi Screen Media?
It was the right deal to do at the right time. We have developed and grown our networks. The deal was a gamechanger and formed a template for others to follow.
How do you get a revenue uplift from India quite in line with the success you have had with the audiences here?
We have a two-pronged strategy in India. We launch new networks that will rate and grow audiences for us in this market. This is how ad revenue will grow. On the distribution side, there is a tipping point where analogue shuts down. Australia went quickly from analogue to digital. In India, how quick will the transition be? At what point do addressability, cable, DTH, number of channels and package costs come into play? That is something we all are trying to grapple with.
Global media companies are setting up JVs with local companies in India. Is Discovery looking at something like this to grow its business in India?
JVs are being done now by companies that were maybe 10-15 years late in getting into India. The question is whether they are doing a JV because they want to do it or because they have to. Companies that came into India early like Discovery have done it on their own terms.
Having said that, there are times when a strategic alliance makes sense. In Japan, for instance, we have a JV with JCom. The Hub, our new channel that is set for launch, is another good fit as it brings together two strong brands in production and distribution.
