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Discovery puts multiple revenue streams on the table with streaming food service

Discovery Inc. is looking to bring multiple revenue streams to the latest addition to its direct-to-consumer menu.

Set to debut in late October, live interactive cooking platform Food Network Kitchen will have monetization opportunities around advertising, sponsorship, subscriptions and a slice of monies generated by ingredient and product sales. Food Network Kitchen will be integrated into Amazon.com Inc.'s Alexa voice assistant line.

Discovery President and CEO David Zaslav told analysts on a Sept. 26 call that the service will appeal to consumers who "view and do," with proprietary technology to "eliminate the pain points associated with cooking, meal prep and grocery shopping."

Zaslav had noted on the company’s second-quarter earnings call that Discovery was cooking something up in the direct-to-consumer environment in the culinary category. Alluding to the spate of entertainment-oriented streaming services that are in or about to enter the market, Zaslav said while there is "a growing list of companies fighting to own the living room and the TV set, we believe we, with Amazon, are about to take a major step forward to own the kitchen."

The new streaming service will draw from Discovery-owned properties in the genre, such as Food Network (US) and Cooking Channel (US), as well as their cadre of celebrity chefs. The service's lineup will feature 25 live, interactive cooking shows per week, including some led by Bobby Flay, Guy Fieri and Rachael Ray, plus more than 800 on-demand cooking classes, 3,000 instructional videos and other culinary-themed fare.

Food Network Kitchen will also be available across Apple Inc.'s iOS and Google LLC's Android mobile devices. The service will roll out across additional platforms and devices in 2020, as well as into select international markets.

Food Network Kitchen joins Discovery's current DTC lineup, including sports service Eurosport Player; Dplay, featuring content from across Discovery's portfolio, also on that continent; automotive proponent MotorTrend; and GolfTV, which provides tournament coverage and instructional fare in various international markets. A global natural history service is scheduled to debut next year.

Peter Faricy, the CEO of Discovery's global direct-to-consumer unit, said the service will have several layers. The first will feature recipes, with the company having 80,000 in stock, as well as various classes, tutorials and shows.

"Our goal is to build up a large audience in the free layer and really convince them that it's worth becoming a subscriber," he said. The content in front of the paywall will be ad-supported.

Consumers can access the full suite of content features for $6.99 a month or $59.99 annually. The company is offering an initial free trial period of three months at launch, along with a limited-time discounted rate of $47.99 a year.

While the subscription product will not feature commercials, Faricy said segments might offer sponsorship opportunities, putting another potential revenue dish on the table.

Discovery will also share in the transactional revenue from the sale of ingredients used in the recipes and displayed on the programming through the Food Network Kitchen app. Faricy said the company is not entering the food supply arena, however, as it has "no plans to purchase a grocery store chain."

Food fulfillment will be handled by Amazon Fresh, Instacart and Peapod.

In 2020, Food Network Kitchen will unveil a one-touch purchasing feature enabling consumers to buy appliances and utensils used by the Food Network Kitchen chefs via Amazon and other retailers. An around-the-clock live culinary "Kitchen-on-Call" support line is also slated to come on board in 2020.

Dave Limp, senior vice president of Amazon Devices and Services, said on the call that teams at Discovery and Food Network approached Amazon about the service about a year ago. Limp believes that voice activation — whether providing help in the form of instructions, ingredients and tips — is "a compelling proposition" as it will lessen the burden of food preparation in the kitchen, often the social center of the home. Users, he noted, will not have to thumb through printed recipes, which will free their hands for actual cooking.