Is streaming TV slowing its roll? The short answer is “yes,” but it’s not that simple.
On the surface, it appears that fewer signups and more subscription cancellations are in the cards for some as the sector stares down a market correction that may already be underway.
Disney+ is the latest player to see a slowdown, gaining just over 2 million paid viewers in its fiscal fourth quarter, for a total of 118.1 million. As The Wall Street Journal reported, “Analysts had expected this quarter’s total to come to 125.3 million. During the previous quarter, Disney+ had added more than 12 million new subscribers.” Disney shares fell roughly 4% following the news.
Throughout 2020 and into this year, as lockdowns and restrictions drove millions into cocooning at home, streaming TV channels were proliferating like dandelions.
But with the pandemic abating and real-world activities outside the home seeing a surge — Disney’s theme park revenue was up 99%, for example — consumers are scrutinizing monthly recurring charges from the 20-plus streaming TV services now available.
PYMNTS’ latest Subscription Commerce Conversion Index, a sticky.io collaboration, published in September, found that “Despite growth, consumers’ appetite for retail subscription services is tapering,” adding that 19% of consumers with retail subscriptions “say they plan to pull back.”
Read the study: The Subscription Commerce Conversion Index
Room to Grow, But Will People Pay?
As for the rest of the field, Netflix is fending off downward pressure with a slate of original programming and a platform that lets users access its entire library, compared to Amazon Prime and Disney+, which also let users rent or buy programming.
Netflix added 4.4 million households in the third quarter, giving the streaming leader 213 million subscribers.
Asked on its latest earnings call about a possible contraction of the subscription TV market as the pandemic eases, Netflix CEO Reed Hastings said, “We can’t come off the craziness of COVID and be confident of the next 2 years. So we’re going to push really hard. If you think about the big picture, we’re at 200-and-something million. That’s pretty small compared to pay TV households, ex China. So just matching the pay TV households, plenty of room for growth.”
Several Netflix originals that were delayed by the lockdown are set to air in the fourth quarter, and Netflix believes this will help lock in current subscribers and attract new ones.
Meanwhile, CNBC reported that, “In April, Jeff Bezos said more than 175 million Amazon Prime members had streamed shows and movies in the past year. No updates were given during the second or third quarters.”
A Blurrier Picture Beyond the Big Three
Beyond the big three — Netflix, Disney+ and Amazon Prime — things get murkier.
In July, NBCUniversal’s Peacock reported 54 million net new subscribers and more than 20 million monthly active accounts, while according to Variety reporting on the Nov. 4 ViacomCBS third-quarter earnings call, the media giant “added 4.3 million streaming subscribers in the quarter, most of which came from domestic signups for Paramount Plus.”
Other players with potentially strong hands include WarnerMedia’s HBO Max, with a reported 69.4 million global subscribers, and Apple TV+, which is rumored to have about 20 million U.S. subscribers. To date, the tech titan has not released exact subscriber totals.
As U.S. households find themselves saturated with streaming options, the various services are looking for new growth overseas to keep the watch party going. Netflix’s surprise South Korean hit series “Squid Game” was a global sensation, and the major streaming competitors are also actively looking at expansion in markets from Asia to Latin America.