For many people, two of the most powerful words in the English language are “discovery” and “curiosity.” In fact, John Hendricks combined the two words to title his 2013 biography, “A Curious Discovery.” Now that he is no longer associated with the cable network that he founded—The Discovery Channel—Hendricks is launching a new venture, Curiosity Stream. Just as The Discovery Channel (now, simply “Discovery”) was precisely the right idea for a young cable television industry in 1985, Curiosity Stream sets the standard for special interest subscription ad-free video-on-demand in 2015. With HBO, CBS News and other new “SVOD” services available for an emerging marketplace.
A monthly subscription fee buys access to a library of short- and long-form programs in four general categories: science, technology, civilization and the human spirit. Some programs are produced by Curiosity Studios—mostly, these are short-form interviews with scientists and other experts, often illustrated with animation. At the start, many of the long-form programs will come from TVO (that’s TVOntario, one of the best non-fiction producers in Canada), Japan’s NHK, France’s ZED, and of course, the BBC Worldwide. With two or three years, the service anticipates 2-3,000 titles; this year, subscribers will have access to about half that number of programs. Happily, John recognizes the challenges associated with VOD navigation, and I’m hoping to see Curiosity Stream reinvent the visual interface so that their programs are easy to find.
The assortment of programs being assembled for the March 18, 2015 launch. Many are reminiscent of what The Discovery Channel used to be—before its prime time schedule began to resemble other cable channels (“Naked and Afraid,” etc.). Among the titles announced so far: “The Nano Revolution,” “Simon Schama: Shakespeare and Us,” “The Age of Robots,” “Destination Pluto,” and “Scotland: Rome’s Last Frontier.” There will be 4K programming, too—UltraHD for those who own the newer high-resolution TV sets—including a newly commissioned project called “Big Picture Earth” by the filmmaker responsible for “Sunrise Earth.”
Hendricks and his team are deeply experienced in the acquisition, production, and marketing of these types of programs—so this is a startup with a high likelihood of success. The intelligence of their marketing model impressed me, and made me wonder why others don’t approach the market in the same way. For $2.99 per month, you can watch in standard resolution—a terrific on-ramp for viewers who are either new to SVOD or are more likely to be fairly light users, at least the start. At this price, it’s almost a trial subscription with an easy upsell to 720 HD resolution at $3.99 per month (which is all that most people probably need right now). For those with more extravagant viewing habits, 1080 HD resolution costs $5.99 per month; the 4K Ultra HD service costs $9.99 per month (but at the start, there won’t be a lot of 4K programming available—still, some is far more than most other services offer today).
When I first read about the service—it was just announced—I reached out to John Hendricks and his team. Mostly, we talked about strategy. The program acquisition and production strategy is firmly rooted in international cable deals. The right deal spreads the risk among several programmers and distributors. For example, let’s assume that a high quality outdoor production costs about $750K to produce. If one company foots the bill, their programming budget only goes so far. But if Curiosity, for example, puts in $250K to control North American rights, and finds two partners, perhaps one in Asia and another in Europe, and each of them also puts in $250K for their respective territories, then nobody is out of pocket for more than $250K. Rights beyond North America, Europe and Asia provide additional revenue, which is typically shared by the funding producers. This “split exploitation” concept has been around since the 198os, and it works. In the SVOD marketplace, there will be many opportunities for future exploitation, which makes the venture progressively more profitable, and steadily increases the programming budgets, which generate more and better programming, and more subscribers… the circle continues to grow.
Unlike Ted Turner, whose approach to cable was mass market (TBS, TNT, and very broad-based news with CNN), Hendricks has always focused on nonfiction, documentaries, outdoors and reality (in the best sense, and also with many programming ventures way down market—Discovery owns TLC, so you can thank him for “Honey Boo Boo”). The point: he knows how to play the game, understands how to segment the market. His first pass: a three-bucket breakdown that includes (a) historically light TV viewers, the 1 in 8 of us, the 17 million U.S. households for whom TV is not a big part of daily life; (b) the connected world of perhaps 100 million cable and satellite homes, the ones that often complain that “there’s nothing good on TV” where he hopes to capture about 10 million households; and the rising 4K market, which he projects at 10 million households total and perhaps 5 million subscribers to Curiosity. By playing a more upmarket game from the start—he’s betting that there are enough documentary, adventure, curious viewers willing to pay at least a few dollars per month to see what Curiosity offers and to support what would seem to be a very promising future.
Could he be defeated by Netflix hiring a former Discovery executive assigned to buying up lots of rights to Curiosity / Discovery -type programming from the short list of global suppliers? Sure, but it’s not likely that Netflix will zero-in on the nonfiction programs that Curiosity Stream plans to acquire. The nuanced understanding of programming for, and marketing to, this particular audience is not something that Netflix can easily replicate. Hulu probably won’t go there, and neither will Amazon. YouTube is interested in other aspects of the business, so it’s likely that John and his team will be able to build the same kind of success that they enjoyed with Discovery.
In some respects, John Hendricks is a smart guy who found the right long-term niche. Broadening the view, I suppose it’s possible that TCM will offer a similar service—a movie archive with a greater emphasis on old movies than Netflix or Amazon may offer. The days of exploiting an old Hanna-Barbera library (one of the foundation blocks of Cartoon Network in its infancy) are over, but I suppose an SVOD animation service might be able to support itself. Old TV shows are currently experiencing a nostalgic burst with over-the-air channels exploiting old libraries—I now record “Naked City” and sometimes waste a half-hour watching “F-Troop” on MyTV, or similar programs on Antenna and its competitors. Not much SVOD opportunity there. Sports wants to be live—so after-the-fact viewing of sports events doesn’t provide much marketplace power for SSVOD (sports subscription VOD?). Weather, news – same problem; neither is good SVOD product. Children’s programming works, and I’m sure some combination of Disney, Nickelodeon, Cartoon Network and PBS Kids will fight it out in a battle for market share—a newcomer would find it difficult to acquire sufficient product in this brand-obssessed (“Dora the Explorer,” etc. marketplace), but the BBC’s CBeebies might move in that direction. History never found a large enough audience to sustain historical programming, so it became a popular mass appeal network. Food Network doesn’t focus enough recipe programs any more, and their competition series aren’t likely to generate large numbers of individual subscriptions. Clever marketing schemes aside, most other cable networks are mass appeal, or broad appeal, so they’re probably better as cable networks with some VOD than full-scale SVOD services. I think there’s some potential in BBC America—their airtime is focused on mass appeal but the BBC library—even discounting for rights limitations—is probably large enough to succeed in SVOD. Comedy Central has potential, but Curiosity Stream trumps comedy because it benefits from a higher degree of program scarcity (there’s no shortage of comedy product available). I certainly wouldn’t discount the potential of a music channel’s success on SVOD—perhaps from MTV, BET, or a country music source.
Which is to say: I think Curiosity Stream has chosen its niche wisely; packaged and priced its product slightly ahead of the market; that it benefits from the right visionary and management team; that is it among a short list of non-movie / non-sports programming franchises where 4K truly enhances the viewing experience; and that it promises some terrific viewing experiences now sorely missed. The idea of a truly global, any-platform, anywhere service in this programming space is extremely appealing. In short, I think Curiosity Stream is the right idea for a clearly defined audience that is probably underserved and ready to pay a reasonable monthly fee for the privilege of watching high quality non-fiction programming from around the world.