Discovery and Amazon Serve Up New Cooking App
September 25 2019 - 11:29AM
Dow Jones News
By Benjamin Mullin
Discovery Inc. is looking to generate more revenue from its
stable of celebrity chefs- -- and help Amazon.com Inc. sell more
groceries in the process.
The cable-TV network is launching a new video-streaming app
called Food Network Kitchen in partnership with Amazon that will
let subscribers attend up to 25 live cooking classes a week given
by the likes of Martha Stewart, Guy Fieri and Bobby Flay. The chefs
will also answer user questions on the service, which will cost
$6.99 a month or $59.99 annually.
Discovery's expansion into the streaming-app business comes as
media industry grapples with the shift away from cable TV. Major TV
players like AT&T Inc., Walt Disney Co. and Apple Inc. are
readying their own streaming services.
Discovery, the owner of more than 15 channels including Food
Network, HGTV and Animal Planet, has gone a different route: Rather
than launching a single all-you-can-eat service with scripted
entertainment, as its rivals have done, the company is hedging
against the decline of traditional pay-TV with several streaming
services targeting different niches: food, home improvement and
lovers of the natural world.
"That's going to be a street fight," Mr. Zaslav said of
Discovery's competitors. "There are a lot of companies, it's going
to get very messy."
Food Network Kitchen subscribers can use the app to buy
ingredients for recipes shown in classes through an integration
with Amazon Fresh and other food-delivery services such as Peapod
and Instacart, said Peter Faricy, chief executive of Discovery's
direct-to-consumer business. Discovery gets a cut of sales revenue
from ingredients that Food Network Kitchen subscribers buy on those
services, Mr. Faricy said.
The ingredients will be delivered in supermarket-sized
quantities, differing from the meal-sized portions popularized by
companies like Blue Apron Holdings Inc. or HelloFresh SE, Mr.
Faricy said.
Food Network Kitchen will debut in October. Amazon will help
market the app as part of a multiyear agreement, said Discovery
Chief Executive David Zaslav. The app also will be integrated
within Amazon's Alexa voice-controlled assistant.
"This is a foundational relationship for them, and it's a
foundational relationship for us," Mr. Zaslav said. "This is
another massive funnel that we can use to build this into tens of
millions of homes in America."
Food Network Kitchen is the first in a series of streaming
services that Discovery is planning to launch in the coming months.
Also in the works: A new nonfiction streaming service that will
feature Discovery's natural history programming and a home
improvement streaming service featuring lifestyle gurus Chip and
Joanna Gaines.
Expanding into new services is crucial for Discovery, which is
battling a decline in traditional pay-TV subscribers alongside its
industry peers. Last quarter, Discovery reported a 3% decrease in
subscribers to its portfolio of cable channels compared with the
previous quarter, though both advertising and affiliate revenue
were up thanks to rate increases and strong demand for upfront ad
buys.
Food Network Kitchen's live classes will be modeled on those
offered by Peloton Interactive Inc., which streams spinning-class
videos to users of its upscale exercise bikes, Mr. Zaslav said.
Food Network Kitchen will also include 800 on-demand cooking
classes and 3,000 step-by-step instruction videos. And Discovery is
putting some of its cooking-themed Food Network shows, such as
"Barefoot Contessa," "Guy's Ranch Kitchen" and "Good Eats" on the
service.
The explosion of direct-to-consumer streaming services like
Netflix Inc. and Amazon Prime Video has sent companies across the
TV industry scrambling to launch their own offerings.
Discovery still makes most of its money on TV advertising and
affiliate fees. The company earmarked between $300 million and $400
million in 2019 to develop, market and operate new video-streaming
services. At full capacity, Discovery's direct-to-consumer division
will employ at least 150 people.
A former executive at Amazon, Mr. Faricy was hired in 2018 to
help Discovery find its footing in the industrywide battle for
streaming-video subscribers.
Dave Limp, senior vice president of Amazon devices and services,
said in a statement that the company hopes Food Network Kitchen
inspires customers "throughout every part of their cooking
journey."
Although companies like Netflix have a head-start, Mr. Faricy
said that Discovery's vast content library gives it an edge over
its rivals.
"We have a huge advantage," he said. "The recipes, the
tutorials, the TV shows -- it's all content we already own."
Write to Benjamin Mullin at Benjamin.Mullin@wsj.com
(END) Dow Jones Newswires
September 25, 2019 11:14 ET (15:14 GMT)
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