Future of TV Briefing: Ad-supported tiers are boosting streaming subs, but for how much longer?

This week’s Future of TV Briefing looks at streaming service owners’ latest quarterly earnings reports, as well as some recent studies regarding streaming subscriber sentiment.

• Time to renew
Nielsen’s currency change-of-mind, Showtime’s time to shine and more

Time to renew

What subscription fatigue? Based on streaming service owners’ latest quarterly earnings reports, people are still willing to shell out for paid subscriptions.

Check out the latest streaming subscriber counts that companies reported for the third calendar quarter of the year:

• AMC Networks: 11.8 million subscribers (+200,000)
• Disney+ (excluding Disney+ Hotstar): 122.7 million (+4.4 million)
• Fubo: 2 million (+142,000)
• Hulu: 47.4 million (+700,000)
• Netflix: 282.7 million (+5.1 million)
• Paramount+: 72 million (+3.5 million)
• Peacock: 36 million (+3 million)
• Starz (excluding regions it has left or is leaving, like the U.K.): 15.5 million (-370,000)
• Warner Bros. Discovery (includes HBO, Max, Discovery+): 110.5 million (+7.2 million)

Of the eight companies listed, only one reported losing subscribers in the quarter, and that was Starz, which is in the process of turning off its service in some regions.

So all that fretting over people canceling their streaming subscriptions because of the economy, rising subscription prices, a strike-induced programming drought, etc. — well, it hasn’t happened (yet).

Just to put a point on the financial considerations motivating the concerns over subscriber churn, here are some stats from a study by Ernst & Young Global that was released in October:

• Monthly streaming subscription rates have doubled in the past decade.
• Some streamers have increased their monthly subscription prices by 40% in the past year.
• Fifty percent of households don’t agree that they get enough value for the streaming prices they pay, up from 45% last year.

So, what gives?

The clearest answer for why streaming sub counts continue to climb despite the churn concerns is advertising. Once again except for Starz, all of the aforementioned streaming services offer ad-supported tiers.

Executives at Disney and Netflix have been the most vocal about their respective ad-supported tiers’ subscriber contributions. Ad-supported sign-ups accounted for more than half of Netflix’s new subscribers in Q3 2024 for countries where its ad-supported tier is available, according to the company’s letter to shareholders published on Oct. 17.

“Right now, in the United States, about 60% of all new [Disney+] subs are going to — are buying our streaming services, advertising supported or AVOD. I think right now, I think it’s 37% of total [Disney+] subs in the U.S. are AVOD subs — 37% in the U.S. and 30% globally,” Disney CEO Bob Iger said during the company’s earnings call on Nov. 14.

Now, Iger also indirectly indicated where the ceiling resides on this streaming subscriber growth. He said that Disney increased Disney+’s subscription price in order “to move people in the AVOD direction.” In other words, the ad-supported tier is the safety net for streamers to catch subscribers on the verge of churning. That strategy is clearly working well at the moment. But at some point, people may decide the lower-priced ad-supported tiers still cost too much — because as much as cost is a concern, so is content.

The top reason people in the U.K. canceled a streaming service in Q2 2024 was that they weren’t using it enough or had run out of things to watch on it, according to TiVo’s Q2 2024 Video Trends Report: U.K.

Additionally, streaming services’ programming libraries are becoming less unique. Across Amazon Prime Video, Apple TV+, Disney+, Netflix and Paramount+, only 0.2% of the TV, film and sports content in their libraries are unique to a single streamer, per Gracenote’s 2024 State of Play report.

Which is to say, sure, people are willing to downgrade to ad-supported tiers rather than cancel outright for the moment. But at some point during those commercial breaks, they may come to realize that they’re still paying for more than what they’re actually receiving in return.

What we’ve heard

“If you were to say 15 years ago, ‘Hey, we’re going to be paying sponsorship dollars to watch Tiger Woods hit a ball into a screen,’ people would look at you like you had two heads.”

— Markacy’s Chris Jones on Tiger Woods-backed simulator golf tournament TGL

Numbers to know

727,700: Number of paid subscribers that Twitch streamer Kai Cenat has amassed after live-streaming for 24 hours a day for 30 days in November.

$28 million: How much money LeBron James’s entertainment company SpringHill lost last year.

100,000: Number of paid subscribers that digital video network Tastemade has.

What we’ve covered

Creator agencies have embraced AI, but is the tech changing marketers’ minds?:

• Creator agencies are using AI to scale up their abilities to source influencers for brand campaigns.
• But some industry experts are skeptical of the tech’s usefulness.

Read more about creator agencies’ AI use here.

Ahead of its January launch, brands line up to get involved with new ESPN golf league TGL:

• The simulator golf tournament will premiere in January.
• SoFi, Genesis, Best Buy and Businessolver are among its launch sponsors.

Read more about ESPN’s golf league here.

Marketers are keeping a close eye on Amazon’s shoppable Prime ads this Thanksgiving:

• Marketers planned to use the Thanksgiving holiday weekend to test Amazon Prime Video’s shoppable ad formats.
• They primarily set aside relatively small experimental budgets for the campaigns.

Read more about Amazon’s shoppable Prime ads here.

What we’re reading

Nielsen cancels currency change:

Nielsen has pulled a Google and decided not to eliminate its legacy C3 and C7 TV measurements after all, though it is still pushing its new data-based measurement system, according to Adweek.

Showtime’s time to shine:

While Paramount seemed to be effectively folding its one-time HBO rival into Paramount+, now the media conglomerate is looking to revitalize its top-shelf TV network ahead of its acquisition by Skydance Media, according to The Wall Street Journal.

Ms. Rachel is YouTube’s Mister Rogers:

The children’s education creator has expanded into retail and her toy line is slated to be the top new toy license this holiday season, according to The New York Times.

The question of creators’ IP:

One creator has filed a lawsuit against another claiming copyright infringement after the latter creator posted videos and photos that appear to mirror the former’s posts, in a case that could draw attention to the fuzzy legal landscape for creators, according to The Verge.

Walmart’s latest shoppable TV gambit:

The retail giant has enlisted Roku to produce a feature film for The Roku Channel that opts for two “shoppable moments” instead of littering the movie with product integrations, according to Business Insider.