Discovery+ Streaming Service Launches in 2021 at $4.99/month: Can It Thrive in a Saturated Market?

Discovery, Inc. officially launched its subscription video-on-demand (SVOD) platform, discovery+, on January 4, 2021. Priced at an affordable $4.99 per month, the service offers subscribers access to a rich lineup including HGTV, Food Network, TLC, Travel Channel, and the flagship Discovery Channel. The company is expanding rapidly, rolling out localized versions across 25 key global markets such as Scandinavia, Italy, the Netherlands, Spain, the U.K., Ireland, and India throughout 2021.

Key Insights

• Discovery+ debuted in January 2021, entering an intensely competitive SVOD landscape.
• Discovery's stock has underperformed the broader market over the past seven years and does not currently pay dividends.
• The platform faces stiff competition for consumer dollars amid a crowded streaming environment.

In a streaming market dominated by giants like Netflix, Disney+, Apple TV+, Amazon Prime Video, AT&T, and Comcast, Discovery+ aims to carve out its niche. However, the limited consumer budget for streaming subscriptions means smaller or new entrants must offer compelling value or bundled deals to attract and retain viewers. This challenge echoes the traditional broadcasting and cable industries’ long-standing strategies of bundling services with discounts.

Discovery’s stock performance has been lackluster, peaking nearly seven years ago before entering a decline that bottomed out in 2017. Despite no dividend payouts, recent sentiment improvements in 2020 suggest a possible turnaround, although the stock remains below its early 2020 highs. Analyst consensus remains cautious with a "Moderate Buy" rating, as Discovery’s direct-to-consumer footprint may be insufficient to dominate the streaming space.

Pro Tip

Subscription business models emphasize recurring revenue through monthly or annual payments, prioritizing customer retention over acquisition to ensure sustained access to services or products.

Discovery Stock Long-Term Performance (2008 – 2020)

Following a strong uptrend from the 2008 lows, Discovery’s stock reached an all-time high of $45.38 in January 2014 before entering a prolonged downtrend. The decline accelerated in 2017, hitting lows not seen since 2010. A rebound occurred in late 2018 but was capped at key Fibonacci retracement levels, followed by sideways movement and a further dip in early 2020. The stock has since shown gradual recovery but needs to surpass the November 2019 peak of $33.65 and ultimately the 2018 high of $34.89 to confirm a multi-year double bottom and signal a renewed uptrend.

Technical Analysis Tip

A double bottom pattern in technical analysis indicates a potential reversal from a downtrend to an uptrend, characterized by two distinct lows at similar price levels separated by a moderate peak.

Final Thoughts

While Discovery+ has generated positive market attention since its launch, the company faces significant hurdles in establishing itself within a saturated streaming market. Success will depend on its ability to differentiate content offerings and attract a loyal subscriber base amidst fierce competition.

Disclosure: The author held no positions in Discovery, Inc. securities at the time of writing.

Discover engaging topics and analytical content in Company News as of 08-12-2020. The article titled " Discovery+ Streaming Service Launches in 2021 at $4.99/month: Can It Thrive in a Saturated Market? " provides new insights and practical guidance in the Company News field. Each topic is meticulously analyzed to deliver actionable information to readers.

The topic " Discovery+ Streaming Service Launches in 2021 at $4.99/month: Can It Thrive in a Saturated Market? " helps you make smarter decisions within the Company News category. All topics on our website are unique and offer valuable content for our audience.