Discovery Channel - Discovering India: Reaching Out to

Indian Viewers
In October 2002, readers of 'India Today4,' a popular weekly magazine in India were
surprised to receive a program guide of Discovery Channel (Discovery) along with the
magazine. The program guide provided information on Discovery's programs for the
coming quarter. Along with programming information, it provided a program summary.
The program guide was in the form of booklet that could be pulled out from the magazine
and retained by the consumer.

This move was aimed at familiarizing Indian viewers with Discovery. According to
channel sources, a market research survey revealed that while viewers loved to watch
Discovery; they were not aware of its programs and their broadcast timings. Sanjay Raina
(Raina), Associate Director, Marketing, said, "The booklet is laid out in an easy-to-use
manner, so that consumers can plan their viewing on Discovery by flipping through its
pages and locating the different time bands."5 Discovery also changed its programming
content and announced a new programming strategy for its Indian viewers.

In early 2003, it announced a distribution tie-up with Sony Entertainment Television

(SET) India Limited. Under this arrangement, Discovery would be made available by
SET along with its other channels. According to channel sources, this would help
Discovery increase its viewer base from 21 million homes to 29 million homes.

Though Discovery's changed programming strategy was successful (it increased its
viewership from 13 million in 1999 to 21 million in 2001), analysts expressed doubts
about the channel's continued viewership growth in India, as National Geographic
Channel (NGC); (Refer Exhibit I), its competitor, had also changed its programming
strategy to increase viewership. However, Discovery was confident about its performance
in India and said that it did not regard NGC as its competitor, as the programming content
of NGC was different from that of Discovery.
 Background

In 1985, Cable Educational Network Inc., founded by John Hendricks, launched

Discovery channel in USA. Due to the increasing popularity of the channel, United Cable
Television Corp., Cox Cable Communications Inc., and Tele-Communications Inc.,
invested in the company in 1986. In its first year of operations itself, the channel's
subscription increased to seven million in the US. Discovery offered non-fiction
programs that gave quality insights into matters related to history, science, adventure,
nature, civilization etc.

In 1987, Discovery entered into an agreement with Mitsubishi Corporation6 to telecast

Discovery programs in Japan. In 1990, Discovery launched television's first interactive
video7 - The Discovery Interactive Library. In the following year, Cable Educational
Network Inc's name was changed to Discovery Communications, Inc (DCI).

In 1994, DCI launched its programs in a few Asian countries. In 1995, DCI extended its
programs to Canada and India. In the same year, it launched its online service -
Discovery Channel Online - and acquired Dallas-based Discovery Store Inc, and renamed
it Discovery Channel Store. It also launched its first ever consumer catalog, Discovery
Channel Catalog, which provided information about the merchandise offered by the
channel.

The catalog provided information about more than 2,000 products by 2002. In 1996, DCI
launched Discovery channel in Brazil in Portuguese language and entered Europe by
launching its channel in Germany, Austria and Switzerland.

In the same year it announced the launch of new channel - Animal Planet - in the US,
which aired programs based on animals and the environments in which they lived.
Discovery also announced the launch of Discovery Kids programs, which would be aired
once a week. By the end of 1996, Discovery's subscription increased to 101.4 million
household around the world.And by 1997, according to Total Research's EquiTrend
study,8 Discovery was the number 1 media brand surpassing even the National
Geographic Magazine9. In the same year it entered Turkey through a partnership
agreement with The Media Group. In March 1997, DCI entered into a joint venture with
British Broadcasting Corporation (BBC)10 to launch BBC America.

Discovery was the first network to target channels at different viewer segments to
increase viewership and cater to the viewing needs of different viewers. To suit the needs
of different viewers, Discovery offered The Science Channel, Discovery Civilization
Channel, Discovery Home & Leisure Channel, Discovery Wings Channel and Discovery
.
By 2002, Discovery channel became the world's most widely distributed television brand.
Discovery channel was aired in over 155 countries and had around 700 million
subscribers (Refer Table II for its Global Presence). The 14 entertainment brands of DCI
were distributed through 33 networks in around 33 languages all over the globe

Along with launching various infotainment channels, DCI sold educational products and
services based on its television programs to consumers through its Discovery Consumer
Products Division to leverage its brand name and provide innovative products to students
(Refer Exhibit II). Discovery success was attributed to its programming mix and its
marketing strategies. However, in India, Discovery faced the problem of positioning itself
in the viewers' mindset. In India, Discovery was perceived as a specialty channel airing
programs on wildlife and nature.
 Discovering India

When Discovery entered India in 1995, the Indian television market was dominated by
entertainment channels which provided family soaps and film-based programs to viewers.
Discovery was the first channel to provide infotainment programs in India. It aired
programs related to Nature, Wildlife and Science & Technology in English. Discovery
was successful in attracting viewers; in the first year of its operations it reached 3 million
homes. The reasons for its success were:
- Its innovative programs, which gave viewers a break from routine family dramas aired
on entertainment channels in urban areas.
- Parents, who were concerned about the influence of TV on children. They liked the
channel's informative programs, which had a positive influence on children.

In mid-1999, Discovery became a pay channel, charging around Rs 5 per household.

Subsequently the number of households receiving Discovery went down to 8 million
from 13 million in the first quarter of 1999 as operators stopped airing the channel.
However, with consumers demanding the channel, cable operators were forced to resume
airing the channel. As a result, the number of households receiving Discovery increased
to 12 million within 6 weeks.

Though Discovery aired a variety of programs covering a wide range of subjects, such as
Nature, Wildlife, Science & Technology, Culture and Civilization, Indians perceived it as
a channel airing programs on nature and animals and regarded it as an educational
channel. Commenting on the channel's brand image in India, Kiran Karnik (Karnik),
former MD, Discovery India, said, "Discovery India has to rework its brand positioning."
Karnik announced that the channel planned to undertake an extensive advertising and
brand building exercise to change its brand image in the country. Discovery also
announced that it would try to enhance its reach in India. In order to reach more viewers,
Discovery tied up with Doordarshan (DD)11 to air Discovery programs in Hindi12 for
two hours on DD. This move helped Discovery reach people who did not understand
English.

However, Discovery soon realized that though these programs were successful in the
northern states of India where Hindi was the popular language, in the southern and
eastern parts of India, where the regional languages were more popular, it could not
attract viewers through its Hindi language programs. In order to increase its penetration
in South India, Discovery decided to launch its programs in regional languages.

In 2000, it entered into a revenue sharing agreement with Vijay TV13 to provide two
hours of Discovery programs in Tamil. Under the agreement, both channels shared the
revenues earned through sale of advertisement slots during the broadcast of Discovery
programs. In December 2000, Karnik announced his resignation and Deepak Shourie
(Shourie) took over as MD of Discovery India. By 2001, Discovery realized that Indian
viewers' perception of the channel had not yet changed - they still perceived it as a niche
channel airing programs on wildlife and nature.
 Changing Perception

After Shourie took over as MD, he commissioned a market research to find out how
Indian viewers perceived Discovery. The research highlighted the following points:

• Discovery channel viewers consisted of mostly urban males between 25 - 54 years.

• Around 60% of its viewership was from the SEC A and B.14
• Discovery was very popular with kids and their parents.

According to the study, the channel needed to pay more attention to its image and its
communication with viewers to improve its performance in India. The study revealed that
viewers loved to watch the channel but were not aware of program content and unclear
about broadcast timings. Shourie said, "Discovery gives you so much - from travel to
adventure to medicine to understanding sex, to murder mysteries.

So the first issue was to communicate the sheer width and intense variety of the
programming on Discovery."15 The second issue was changing the image of the channel.
Discovery was regarded as a serious channel with infotainment programs.

However, according to channel sources, unlike its image, Discovery offered a variety of
programs covering a range of subjects and topics, such as Junkyard Wars (two teams
competing to be the first to build a machine out of scrap found in a junkyard), Fabulous
Fortunes (this program explored the sources of wealth in the 20th century) and
Understanding Sex (this explored the origins of sex) etc.
In August 2001, to address the above two issues, Discovery announced new
programming strategy with around 118 hours of new programming per week. This
strategy was implemented in October 2001. The new strategy - 'My Time on Discovery'-
was based on viewer needs and viewing habits.

Commenting on the new programming strategy, Shourie said, "The concept of 'My Time
on Discovery' recognizes the viewing convenience of each family member individually
and collectively, by giving them what they want from Discovery at the time that they
want it, while still catering to the family as a whole. In this way the new viewer response
will be 'Discovery is a must watch for me', and in the process provide advertisers a
focused platform to reach out to their key target groups."16

According to channel sources, the new strategy was also aimed at attracting advertisers.
Shourie said, "We've achieved critical mass, and now the objective is to monetise the
existing viewership." Discovery introduced programming blocks targeting different
viewer segments on the basis of broadcast time. Time bands were introduced on the basis
of the viewing patterns of viewers across all age groups.

In August 2001, Discovery announced the launch of six time bands - Sunrise (Weekdays
7 a.m to 9 a.m), Discovery Kids (Weekdays 3 p.m. to 4 p.m.), Action Zone (Weekdays 4
p.m. to 5 p.m. with a repeat at 11 p.m.), Prime Time (Weekdays 8 p.m. to 11 p.m.),
Friday Showcase (9 p.m. to 11 p.m.) and Super Sundays (7 a.m. to midnight)
In April 2002, Discovery extended its six time bands to nine bands with the introduction
of Woman's Hour (Weekdays from noon to 1 p.m.), Amazing Animals and Late Night
Discovery.

According to analysts, the new strategy highlighted the range of programs offered by
Discovery and also differentiated the Discovery channel from NGC. Analysts felt that
with increasing competition from NGC, Discovery was forced to differentiate itself from
the kind of programs offered by NGC. However, Discovery sources did not acknowledge
that NGC was their competitor. Shourie commented, "National Geographic is more
nature oriented. We have a much wider range."

Along with new programming blocks, Discovery also came up with innovative programs.
One such innovative program was 'World Birth Day,' which depicted the preparations
that take place before and after the birth of a child. The program showed the emotions of
mothers-to-be in nine different countries, who gave birth on the same day. The program
aimed at capturing aspects of different cultures and customs connected to the birth of a
child.

The channel also launched India Hour, (aired on Sundays), which aired programs on
India and its culture. Discovery also announced the launch of programs such as Tech
Tuesday, which targeted people interested in technological developments such as spy
gadgets, smart bombs, and Trauma, which depicted the medical emergencies. According
to reports, Discovery's programming strategy was successful. By August 2002, its
viewership among women increased by 21% and among kids by 22%. In the prime time
band its viewership increased by 43%.
 Marketing 'Discovery'

Along with program restructuring, Discovery focused on marketing initiatives to enhance

its image among viewers. It conducted a yearly audio-visual quiz contest for school
students across India to increase awareness about the channel among kids. The contest
was hosted by India's popular quizmaster, Derek O' Brian. The quiz covered five
categories of Discovery's programs - Science & Technology, History, World Culture,
Human Adventure and Nature. Analysts felt that by conducting quiz contests for students,
Discovery was able to increase brand awareness among children and gain more market
share.

In August 2002, Discovery also conducted a contest for students. To do so, it entered into
tie up with Canon India Ltd., (wholly-owned subsidiary of Singapore-based Canon
Singapore Pte Limited). Discovery's executives conducted imaging contests in around 75
schools in seven cities (Delhi, Chennai, Bangalore, Mumbai, Hyderabad, Pune and
Ahmedabad). Analysts felt that this contest helped the channel increase its brand
awareness among children and increase its viewership ratings.

Discovery also conducted Discovery Exhibition, wherein, students from Classes VI to IX

watched the channel's program 'Popular Mechanics for Kids' and created things under
teachers' directions. This was conducted by Discovery in association with Colgate Dental
Cream to create awareness among children about the channel's programs. Discovery also
came up with the novel concept of programming guides to provide information about
Discovery programs for every quarter.
The first program guide was launched in association with India Today magazine in
August 2002. In April 2003, Discovery entered into a tie-up with Businessworld17 to
provide a programming guide for the period April - June 2003. It also used direct mailers
to inform viewers of the channel's programs.

Discovery also conducted contests to attract viewers to channel. In April 2003, it

launched the 'Win With Discovery Channel Contest.' In this contest, viewers were
expected to register online or e-mail their particulars to the Discovery channel. Discovery
channel entered the name of the viewers in its database and held a lucky draw every
month (the contest covered a period of 3 months). The lucky draw winner was awarded
numerous prizes.

Discovery also advertised extensively in the media to enhance its brand image and
increase its brand awareness. It advertised through television channels and the print
media. In the metros it also used outdoor advertising.
 Consolidating the Presence

Discovery announced that it would bring in new programs to consolidate the gains made
by the new programming strategy. It planned to source world-class programs from
Discovery's 14 channels across the globe. Analysts pointed out that none of the programs
were produced in India by Discovery. Commenting on why none of the Discovery
programs were produced in India, channel sources said that producing one program for
Discovery cost around $1.5 million and that revenues in India did not match the costs
incurred for producing programs.

According to Shourie, "If you incur that kind of cost, the revenues just don't come in
India." In 2000, NGC entered into a distribution and marketing agreement with STAR
network in India. According to analysts, this move helped it successfully increase its
reach. It was reported that while Discovery was strong in northern India, NGC was strong
in South India.To increase its presence in South India, Discovery announced that it would
launch a 24-hour feed in Tamil. In March 2002, it snapped its ties with Vijay TV and
announced that it would air Tamil programs in the family time band (8 p.m. to 10 p.m.)
on weekdays. It was reported that the channel would offer programs on the basis of
themes - history on Monday, science on Tuesday, forensics on Wednesday, health on
Thursday and premiers on Friday.

Commenting on the channel's decision, Shourie said, "With Tamil, we hope to capture a
large Tamil-speaking viewer base to the channel and expand viewership in south India."
In June 2002, in order to enhance its distribution reach, Discovery entered into a joint
venture with Sony Entertainment Television (Sony), known as SET Discovery, with an
equity structure of 74:26. The majority stake was held by Sony.

Commenting on the joint venture, Shantonu Aditya, Head (Distribution), SET India, said,
"With Discovery joining our existing bouquet of channels, the One Alliance
partnership,18 announced earlier this year, is in place to offer viewers an enhanced genre
of programming supported by combined distributed strength. We are now strategically
positioned to be the No 1 television network in the country." According to reports, the
alliance would help Discovery increase its reach from around 21 million homes (in 2002)
to around 28 million homes.
 Discovering the Future

Through its alliance with Sony for distribution and marketing, Discovery announced that
it expected to gain a 50% increase in both advertising and subscription revenues. The
channel announced that in the year 2002 around 330 brands had advertised on the channel
and that the channel had registered a 50% increase in ad revenues. According to analysts,
Discovery's decision to air programs on the basis of viewership patterns helped it attract
advertisers.

In order to consolidate its position, in January 2003, Discovery announced the launch of a
new series The Blue Planet, which explored under water life. This program was co-
produced with BBC and it took 5 years to complete the series at a cost of around 7
million pounds. Along with Blue Planet, Discovery also announced the launch of new
programs such as, Special on World War II, Bismarck, Great Romances of the 20th
Century, and Kitchen Chemistry etc.

Discovery also announced the launch of a new program series in January 2003, featuring
around 18 films made by world-renowned producers. The films would be aired in April,
May and June 2003. Some of films to be aired were, Great Cats of India, Himalayas -
Descending India, Immortal Capital - Many Cities of Delhi, Arthur C. Clark's Mysterious
India, Konarak - Chariot of the Sun, Wild and Dangerous and Buddha's Mountain
Wilderness.

However, analysts were skeptical about the channel's future in India. They felt that with
even NGC announcing that it would air new non-wildlife programs on its channel, it
would be very difficult for Discovery to increase viewership. Discovery also faced stiff
competition from specialty channels such as Cartoon Network, CNBC and CNN, which,
though they offered a different genre of programs, attracted viewers to their channels.
Will Discovery garner more revenues and increase its viewership base in India? Only
time will tell.