The Losers: Starz, Apple TV+, Hulu, and Disney+ Are Bleeding Subscribers While Redbox Dies And YouTube TV Possibly Plateaus
As economies across Europe, Asia, Africa, and the Americas experience a slowdown or recession, a global trend of people reassessing and terminating their streaming subscriptions is emerging. Hulu saw a drop of slightly more than half a million subscribers from December to the end of May. Disney+ lost approximately 300,000 subscribers in that timeframe, continuing its downward subscriber trend reported earlier this year. Surprisingly, the most significant subscriber decline comes from Starz, whose streaming application lost 800,000 subscribers in the first half of 2024. You would be wrong if you think things are better for streaming services connected to popular hardware. Apple TV+ lost over 500,000 subscribers and is now hovering at only about 17 million paid accounts. EvenYouTube TV reportedly lost 150,000 subscribers in Q1 2024, a further signal of a global and worldwide trend that people are simply growing tired of managing multiple streaming accounts. It is important to note that many reports of subscriber losses come from Moffett Nathanson, an independent equity research publisher for the telecom industry. Their models foresee a total loss of 2.37 million customers in the United States for cable, satellite, and live TV streaming providers and approximately 10 million by the end of 2024. To underscore why these numbers are not a random divination, cable and satellite companies lost almost 7 million subscribers in 2023.
The company most likely to hit the panic button is The Walt Disney Company. It operates Hulu and Disney+, which steamrolled trends of people trimming their streaming subscriptions from a half dozen to just two to three. Worse, Disney's streaming platforms have been losing paid subscribers since late 2022, with Disney+ and Hulu finishing 2023 with a net loss of total paid subscriptions. In the first quarter of 2023, Disney+ lost 1.3 million subscribers, likely due to a price increase and multiple programming cancellations on the platform. However, as far back as 2022, Disney's corporate leaders had to concede to shareholders that the rapid growth of Disney+ didn't generate enough money to offset the cost of developing hardware to support its streaming efforts and fund original programming. For the last THREE YEARS, Disney's message to shareholders hasn't been about profit but narrowing losses, which, in 2023, it proudly exclaimed it had narrowed by $300 million. Apple TV+'s mistake continues to be that it is only useable via streaming devices that are far more expensive than the rest of your options AND require an investment into Apple's OS ecosystem, which many people are unwilling to make. Starz is an unmitigated disaster right now as Lionsgate attempts to spin it off as a separate enterprise while shutting down its UK division. In short, Starz is a tire fire after Lionsgate management favored Lionsgate during its spin-off from Starz, which has infuriated bondholders and left the streaming service in an incredibly challenged and compromised position.
This makes the only real "surprise" of these streaming subscriber dips YouTube TV's drop. Previously, Industry insiders were prognosticating that YouTube TV would eventually become the cable channel distributor of choice for most Americans and Europeans in the next five years and that cable TV would opt to stream content on YouTube versus dedicated apps. It's far too early to view a single-quarter loss after seven years of growth as a sign that interest in YouTube TV has plateaued. YouTube remains the thorn in traditional media's side that will not disappear, and the industry continues to fight it like an existential threat along with Netflix. Nonetheless, YouTube's attempt to create an alternative to Netflix and Hulu seems stuck at around 8 million subscribers despite YouTube funneling ads for it non-stop. The other issue with YouTube is that people need help to name original programming on YouTube TV outside of Cobra Kai, which it dropped and is now a Netflix property. So, is under 10 million subscribers enough to generate a profit on YouTube TV? Judging from YouTube's pay television competition not managing that with triple those numbers, probably not. Yet, like the rest of the streaming field, YouTube's aggressive expansion plans will continue.
And now let's talk about Redbox and Crackle! They're dead! The odds of ever seeing a functioning Redbox kiosk grace the ends of your local grocery store or pharmacy seem unlikely after Redbox's parent company, Chicken Soup for the Soul Entertainment (i.e., CSSE), got official approval in a bankruptcy court to move from Chapter 11 to Chapter 7 bankruptcy. That means all of CSSE's employees, which stands at around a thousand, will be out of a job and not entitled to any form of benefits or compensation. It is worth noting that Redbox had an independent streaming arm and that its finances and profitability peaked as far back as 2013. Likewise, Chicken Soup for the Soul Entertainment maintained another streaming division beyond Redbox, Crackle, which it bought from Sony. Chicken Soup for the Soul Entertainment bought Redbox for $375 million despite knowing that Redbox had a mounting debt problem and bought Crackle under similar circumstances from Sony. Furthermore, financial mismanagement has been alleged at CSSE, which reeks of gross negligence more than anything else. Still, its failure does speak to a growing trend of mid-tier streaming services struggling within the current landscape, and the demise of Redbox is a massive blow to those who prefer physical media for movies.
The Winners: Netflix, Crunchyroll, Paramount+, Peacock, and (Maybe) Max
To say Netflix has bucked industry trends in the streaming market would be a MASSIVE understatement. Netflix has done everything insiders and consumer advocates have told them not to do and has seen continual growth and skyrocketing revenue regardless. After initiating its password-sharing crackdown, not only did it NOT experience the wave of subscription cancellations many thought was coming, but new paid memberships jumped in its first financial quarter following the policy change. In late 2023, 39% of Netflix subscribers indicated that they would cancel their subscriptions if Netflix increased prices, and then that did not happen in 2024 after price increases launched. Netflix's new ad-based tier, which was initially mocked online, has gone on to become one of the primary reasons why Netflix continues to spurn forecasts that it will see declining subscription growth. Disney+, Apple TV+, Starz, Hulu, and more have all been denounced for canceling original programming and suffered from subscriber cancellations as a result. Netflix is NOTORIOUS for canning shows that show initial promise but do not meet their sometimes lunasensical streaming targets. And yet, they have NOT faced as much blowback from their audience for their penchant for cancellations. That's not to say Netflix is your friend. Since scaling up its business, it has been repeatedly accused of exploiting tax havens and making deals with totalitarian dictatorships for the sake of increasing its international footprint. There's also the fact that it has repeatedly been a platform for pseudoscience and transphobia. And yet, many of us are still subscribing, and when push comes to shove, we show a sense of brand loyalty to Netflix that other companies would kill for.
When you look at what Netflix has done over the past four to five years, its streaming dominance should be fracturing, as it has done everything wrong theoretically. And yet, that's not the case.Despite the growing signs that people are less satisfied with Netflix than ever, most people have overwhelmingly cited it as their most desired or #1 streaming app in theoretical streaming bundles at 81%. It has original programming that people want to watch, and that's international and not just limited to the United States or Western Europe. Despite all of the consternation, Netflix has an easy-to-use streaming player that works for all ages and languages, and its technical backend is indisputably the best in the industry. However, Netflix's greatest asset is its incredibly successful international expansion program. Unlike its competition, it's still viewed in many markets as a newcomer with no cable presence, which means it is not tied to long-standing traditional telecom media agreements and regulations. Its ability to introduce its streaming service has been incredibly rapid, with Russia and China being the only "major" markets it has avoided due to political or regulatory reasons.
Crunchyroll's rapid expansion while avoiding too many subscriber revolts in response to price increases should also be no surprise. For many, it's the only option on the table to watch anime programming. With the demise of television networks carrying anime shows beyond the most prominent names, Crunchyroll is it, and the service knows it. Despite some relaying monopoly concerns, it shut down Funimation after merging with it. And even in light of a not insignificant price increase, Crunchyroll now sports a 13 million subscriber count. That number is small compared to other services listed in this blog, but it is nothing to scoff at, and there's no disputing that it is bound to grow even more despite the struggles of more prominent names in the streaming application market. The reality is that Crunchyroll is inheriting a world in which anime is the most ubiquitous it has ever been, and that's a worldwide trend. It can snap up thousands of new subscribers by simply announcing a new anime that is exclusive to its application or the renewal of programming that's already there. Its only immediate threats are Netflix and Hulu, as well as smaller services like HiDive. The more meaningful threat is a growing body of anime producers who are more open-minded to alternatives. The amount of legacy anime you can legally watch for free on YouTube with ads is shocking. Furthermore, if Netflix wasn't so one-sided with its relationship with anime producers, it could probably make a stronger push in the market.
Peacock and Paramount+ might seem like the oddest streaming services to post subscriber gains, not losses. However, consider these three key items. First, Paramount+ and Peacock joined other major television networks in carrying the Super Bowl and have live-sports coverage, with a MASSIVE advantage going to Peacock with its service having the most comprehensive sports coverage of any streaming service thanks to it having NBC Sports, Telemundo Deportes, and WWE. A similar advantage goes to Paramount+, which has CBSSports in its streaming package. However, while it has NFL coverage, its edge increasingly stems from its in-depth buffet of international association football games. Live sports might seem like a "boomer issue." Nevertheless, it is moving the needle for older demographics that traditionally have hesitated to jump on cable cutting. It should come as no surprise that CBS, NBC, Netflix, and Amazon have placed bids to buy more live sports matches on their streaming platforms and not less. Yes, Disney owns ESPN, but for a variety of reasons, ESPN has long been the sick puppy of Disney's live television networks. Costs for running the channel and its services are skyrocketing. Likewise, it is bleeding talent and editors, relies increasingly on the "talking heads" format on the television programming it does have and continues to see a drop in subscribers to its ESPN+ service. Finally, Paramount+ has one "X Factor" many people aren't giving it credit for, and that's getting the endorsement of Walmart. For those unaware, Paramount+, despite all of the uncertainty regarding the future of its owner, National Amusements, is now bundled as part of Walmart+, Walmart's attempt to create a competitor to Amazon Prime. Much like Prime Video, there's concern about engagement as most are using Walmart+ to reap monetary benefits from purchases that have nothing to do with streaming films and TV shows. However, being bundled this way has boosted subscribers and opened a floodgate to a new source of income for Paramount+, allowing it to sign new sports licenses and secure additional original programming.
Speaking of Amazon, I will dismiss them from this blog section for a few reasons. One, their video streaming service is lopped into their all-encompassing Amazon Prime subscription, which many people join for the monetary discounts and advertised shipping and handling benefits you get on the Amazon marketplace. Most people are not interested in interacting with Amazon video services the way the company wants them to, and the data shows that only around one in ten Amazon Prime users are interested in upgrading their Prime Video subscription beyond the basic one they get via Prime that doles out ads during movies. So, when Amazon says they have the second largest video streaming subscription user base supporting them, they're technically correct, but only partially so when you factor in engagement.
Likewise, Max is equally guilty of cheating. Warner Bros. Discovery believes that by the end of 2024, it will be able to crack the 100 million subscriber threshold, and it probably will. However, they are shy about admitting that they are lopping current and legacy Discovery+ users and legacy HBO and HBO Max subscribers who still need to transition into Max. The numbers might look great on paper, but Warner Bros. Discovery's streaming community lacks cohesion, and there's no guarantee that its users will universally jump from their old services to Max. And there's one final note about Max that I wish to share. Recently, Warner Bros. Discovery announced it would be rebranding its marquee and IP-based television productions as "HBO Originals," suggesting that they are beginning to realize that ditching the HBO name might have been a bad call.
The Other Streaming Platforms And Prognosticating About The Future
The lesson that studios with streaming applications are discovering is that while the audience for streaming TV and film content is aging, they are also becoming increasingly fickle. Despite the streaming user base growing older, two things are starting to happen. Streaming users are cutting their accounts immediately when their favorite shows get canceled, something Disney and others are trying to address by always having this "buffet" of legacy content to complement original or exclusive programming. Unfortunately for them, this strategy isn't as effective as it once was and the usage of film, TV, and music piracy websites is increasing. You might have this mental image of Disney+ or Hulu being this platform your mother or uncle uses to relive their memories, but something is happening with your mom. She's becoming knowledgeable on how to use the internet and is as frustrated with our current streaming future as you and I are. Also, our generation is getting older, and while we would prefer our services to be easy to use and legal, we still remember our early internet experiences from yesteryear. Finally, with all of these streaming platforms seemingly thinking the solution to their problems is to raise prices, complimented by the stagnation of wages, people worldwide are reassessing which streaming applications are necessities.
The countermeasures to limit losses are familiar cable television battleaxes. The first is live sports. Almost every significant streaming outlet is attempting to close deals to secure long-term sports programming for terrestrial airwaves AND streaming. This past month, the NBA has been at the center of jockeying between NBCUniversal (i.e., Comcast), Warner Bros. Discovery, Disney, and Amazon to see which one will be without basketball games, with NBC estimated to be paying $2.5 billion per season and Amazon shelling out $1.8 billion per year to nudge out Warner Bros Discovery-owned TNT. Now, "program fortification" is a favorite among networks when steering audiences toward their streaming platforms. Nevertheless, the data on how effective it is regarding licensed live programming is mixed. Fox notoriously lost millions on its deal to pry Smackdown from the USA Network. Yet, Amazon's Thursday Night Football deal has net significant gains and might warrant credit in popularizing the sport to younger demographics. The second countermeasure is far more annoying but has been immediately more cost-friendly for media companies: free ad-driven streaming services. Joke all you want, but Tubi and Pluto TV are the fastest-growing streaming services. While most people suspect that this is due to Tubi and Pluto TV slicing away a more substantial share of traditional TV watchers through the growing proliferation of Smart TVs, there's no doubt that there are people who prefer streaming but don't want to open their wallets to ANOTHER monthly subscription. Similarly, these ad-drive platforms have been consistent money-makers, and advertising partners seem to love them.
And then there's the "p-word." Piracy website use is increasing. Now, I want to make it CLEAR that sharing this information is not an endorsement of piracy and circumnavigating copyright laws. If something is legally available for viewing and consumption on the internet, that should be how you do things. However, the push and pull factors that explain why people increasingly turn to piracy today are interesting to discuss. The push factors stem from customers fed up with exclusive content being locked behind apps they are not subscribed to when they already are subscribed to two to three. The second most noteworthy push factor is the worldwide shift in mobile data costs. We sometimes need to remember that there are countries where most of their population relies on their phones to access the internet. The growing trend of these streaming services ratcheting prices doesn't help either. The pull factors are fascinating as they highlight how big of a game changer it was when piracy sites switched from being download-based to streaming-based. I'm not going to get into details about this, but it should come as no surprise that people are more comfortable with clicking a "play" icon to start a stream than playing the game of "Which of these flashing green buttons is the download I'm looking for that doesn't get me malware?" Now, that sounds bad, but the music industry is where this is hurting major labels more than TV and film. However, the need to compete with free is why so many in the entertainment world turn to free but "state-sanctioned" ad-driven streaming alternatives.
But the big looming trend for the future is bundling. Apple has realized that its attempt to buy into the TV and film industry will only take it so far. Its solution was to enter into negotiations with Paramount to begin bundling Apple TV+ with Paramount+. However, those talks have halted in light of Skydance's pending purchase of National Amusements, the owner of Paramount. Nonetheless, the scuttlebutt from film and TV insiders is that bundling is likely the "play" these studios are exploring to hedge their losses and regain subscribers. Bundling was a massive nuisance back during the days of cable. Still, most consumers are open to it when it comes to streaming if it results in tangible price decreases and account unification. Paramount+ is already one step ahead of the pack by signing a licensing deal with Walmart, and who's to say that Costco or an international retailer in Europe or Asia doesn't try to follow suit? Likewise, the industry moving towards bundling means you might see MORE niche and network-specific streaming apps rather than fewer.Hallmark+, helmed by The Hallmark Channel, might sound ridiculous until you consider it a minimal effort to meet requirements to be packaged in a bundle with far more appealing applications, thus netting a dividend that pays off the investment.
All that considered, there are clear winners and losers in the present TV and film streaming world. Bundling was a nightmare back in the day, but if it allows me to merge my half-dozen streaming accounts into three, I might sign off on it. Nonetheless, the cost of these services is the real driver for my streaming use and consumption. I'm cutting bait if things continue getting more expensive for the same goods and services. However, you may be in a different boat, and this blog has a slight North American bias. So, feel free to share what you think is happening with non-gaming streaming.
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