It’s clear the cord-cutting phenomenon has reached a fever pitch, as anyone with a library of content now wants to keep its shows exclusive and launch a subscription streaming video service of its own.
Discovery (NASDAQ: DISCA)(NASDAQ: DISCB)(NASDAQ: DISCK) is the latest to succumb to the craze, announcing it intends to roll out a service dedicated to its Food Network cooking channel, with programs that offer recipes, cooking shows, and live cooking classes. It’s just hard to imagine who would pay $7 a month for what one could easily find for free anywhere on the internet.
Where foodies gather
The new Food Network Kitchen app will feature over 800 on-demand cooking classes, including as many as 25 live weekly classes conducted by celebrity chefs such as Bobby Flay, Giada De Laurentiis, Martha Stewart, Guy Fieri, and Alton Brown.
The app will also house some 80,000 recipes, cooking-related programs, and shows from the Food Network that have already appeared on cable. It will be interactive, allowing users to communicate directly with chefs, and Discovery has partnered with Amazon.com (NASDAQ: AMZN) to let users access its Alexa voice technology to search the video and recipe library.
When it launches in October, it will be immediately available on Apple and Android mobile devices, Amazon Fire Tablets, Echo Show, and Fire TV before rolling out to media players and streaming devices like Apple TV, Roku, Google Chromecast, and Xbox One and Xbox 360 throughout the rest of this year and into 2020.
Just like riding a bicycle
The bid by Discovery to monetize one of its most popular assets is certainly an ambitious effort, but the narrowness of the vertical it’s pursuing makes it seem like a difficult sell. Home chefs can literally find almost all of this on the internet already.
Variety says Discovery likens Food Network Kitchen’s potential to that of Peloton (NASDAQ: PTON), the high-end stationary bicycle maker that just went public at $29 a share, saw it open at $27, and closed its first day of trading under $26 (it’s now just above $25 a share).
Peloton offers subscription-based exercise classes with its spinning bikes, and it notes in its prospectus that 92% of all the interactive fitness equipment it’s ever sold still has a $39 per month subscription attached to it. It gives owners unlimited workouts across multiple users in a household.
But the Food Network app is different from Peloton, whose products themselves are interactive. So getting a live exercise class to tap into is different from deciding on something to cook and then logging in to watch a demo showing how it’s made.
For one, you can get that for free now on YouTube or even AllRecipes.com. The internet is littered with recipes that one can look up, and while connecting to a recipe or video with Alexa is a nice touch, you can already do that with Apple‘s Siri on your iPhone and Google Assistant on your Android mobile device. You can also call up some food companies to get help with cooking, as with the Butterball Turkey Talk Line, which receives some 10,000 calls on Thanksgiving Day alone.
Now we’re cooking with gas
Discovery wouldn’t be the first to slice and dice its offering. Disney, for example, has done that with its sports programming, launching ESPN+ for diehard sports fans. AMC Networks has done similar niche programming, such as its AMC Premiere service that lets you see shows like The Walking Dead and Into the Badlands a week earlier than the cable channel airs it. Both of those services, however, cost $5 per month.
Offering a foodie program does give Discovery a chance to make money on something that is currently free, but it is a pricey service, even in the narrow-vertical market. There’s also something of a commodity aspect to recipes, with sites, books, and even grandma offering ideas, and that aspect of the app would likely be its main draw. I mean, plenty of celebrity chefs already have their own YouTube channels.
So Discovery may have cooked up a way to monetize its network, but it seems highly unlikely very many will want a seat at this table.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Rich Duprey has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Amazon, Apple, Discovery (C shares), Roku, and Walt Disney. The Motley Fool has the following options: long January 2021 $60 calls on Walt Disney, short October 2019 $125 calls on Walt Disney, short January 2020 $155 calls on Apple, long January 2020 $150 calls on Apple, short January 2020 $155 calls on Apple, and long January 2020 $150 calls on Apple. The Motley Fool recommends AMC Networks. The Motley Fool has a disclosure policy.