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Zaslav Throws Down OTT Gauntlet

Discovery CEO Says Nets Will Go Direct to Consumer if Ops Drop TV Everywhere Ball 2/19/2015 2:30 PM Eastern
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Discovery Communications CEO David Zaslav warned operators that a failure to roll out TV Everywhere could force networks to go over the top.

Discovery Communications CEO David Zaslav threw down the TV Everywhere gauntlet Thursday, telling operators that if they don’t step up their efforts to broaden the release of the authenticated service, all programmers will be forced to go direct to consumers on their own.

 

“If TV Everywhere doesn’t develop as it should,” Zaslav said, “it will require all of us to go direct to consumer because the cable guys just aren’t getting it done.”

 

If it went through on its threat, Discovery wouldn't be the first programmer to test the OTT waters. Home Box Office is expected to launch a standalone OTT service later this year as is its premium network rival Showtime. Already CBS has launched its CBS All-Access OTT offering, which allows customers to access certain broadcast and library contet for $5.99 per month. Earlier this month Dish Network launched its SlingTV OTT product,  with similar offerings from Sony (PlayStation Vue) and Verizon expected later in the year.

 

Discovery’s OTT ambitions have been played outside of the U.S., with its Dplay app in Norway that aggregates channels and sells them to consumers without the need for a pay TV subscription.

 

Zaslav said about 250,000 customers in Europe are paying $8 per month for the OTT service, but that it is mostly driven mostly by sports. For example, he added that Discovery has seen spikes in demand for its app around big events like the Australian Open, where Discovery’s Eurosport networks offer preliminary matches. That “Superfan” demand could also translate into the kids’ market in Latin America.

 

Zaslav said he expects the market in the U.S. to be stable, adding that the programmers has secured significant increases in affiliate fees in recent carriage negotiations and TV Everywhere could help drive further monetization of its content.

 

“The best way to do that would be broad deployment of TV Everywhere in the U.S., taking the Superfan groups and going after them,” Zaslav said. “I think the ecosystem in the U.S. stays as is for the next three years. The question is, what happens four, five or six years from now? Will there be a peel off of the direct to consumer business?”

 

Operators have been criticized soundly over the years about the sluggish rollout of TV Everywhere, which allows pay TV customers to watch select programming anywhere at any time on any device. But the rollout of the service has been slow as operators have complained that securing rights from programmers has been increasingly difficult.

 

Recently, the Cable Telecommunications Association for Marketing (CTAM) has stepped up its initiative to get the word out on TV Everywhere.

 

While programmers and operators alike have blamed each other for TV Everywhere’s missed opportunites, Zaslav seems to be the first major programmer to appear to pull out the OTT card if it can’t reach TV Everywhere deals.

 

Discovery was one of the last cable programmers to embrace online video – while others were placing full episodes of their shows online for free, Discovery believed free short-form clips on the Internet that drove viewers to the linear channels was more appropriate.

 

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