Future of TV Briefing: Streaming subscriber growth re-accelerated in Q3 2023

This week’s Future of TV Briefing looks at how major streaming service owners’ subscription businesses fared in the third quarter of 2023.

• The subscription re-up
Warner Bros. Discovery’s chief cost-cutter, Univision’s political pivot, FTC’s influencer marketing enforcement and more

The subscription re-up

In what has been a pretty rough year for the media business — and an especially rotten period for the entertainment industry amid the writers’ and actors’ strikes — the third quarter of 2023 turned out to be a highlight for subscription-based streaming services, based on major streaming service owners’ latest quarterly earnings reports.

The major general-interest streaming service owners — with one significant exception — reported subscriber gains in the period despite the strikes. And they managed to improve the profitability (or lack thereof) for those businesses, largely because of the strikes.

Here’s a quick breakdown of the total number of streaming subscribers each streamer ended the period with and the number of subscribers gained (or lost, in the last entry):

• AMC Networks: 11.1 million (+100,000)
• Disney+ (excluding Disney+ Hotstar): 112.6 million (+6.9 million)
• Fubo: 1.9 million (+327,000)
• Hulu: 48.5 million (+200,000)
• Netflix: 247.2 million (+8.8 million)
• Paramount+: 63 million (+2.7 million)
• Peacock: 28 million (+4 million)
• Sling TV: 2.1 million (+117,000)
• Starz (excluding regions it has left or is leaving, like the U.K.): 15.8 million (+240,000)
• Warner Bros. Discovery (includes Max and Discovery+): 95.1 million (-700,000)

For context, in Q2 2023, four of the aforementioned streamers — AMC Networks, Fubo, Sling TV and WBD — reported sequential subscriber losses. More to the point, all of the streamers reported bigger subscriber gains in Q3 than in Q2. That includes Netflix and Peacock, which had reported the largest gains — 5.9 million and 2 million subscribers, respectively — in the previous period.

What’s surprising about these strengthening streaming subscriber gains isn’t that they came during a quarter when Screen Actors Guild members were unable to promote their projects and were therefore unavailable to help convert subscribers. It’s that the increases contrast with the streaming subscription fatigue narrative.

In July, research firm Hub Entertainment Research published a survey of 1,602 people in the U.S. reporting that 43% said they had reached the maximum number of TV/streaming sources they intend to use. And those people probably have hit their limits. Earlier this month, research firm Parks Associates published a study reporting that 29% of internet-subscribed households subscribe to at least eight separate streaming services.

But the remaining majority seems to still be adding — or re-adding — streaming subscriptions. According to research firm Antenna, 35% of people who cancel a streaming subscription reactivate that subscription within a year. And that’s despite the fact that those returning subscribers are likely paying higher prices, with seemingly every major streamer increasing its subscription fees in the past year or so.

Meanwhile, people continue to cancel their traditional pay-TV subscriptions, and at an increasing rate. In Q3 2023, the top six U.S. pay-TV providers lost, in aggregate, 9.3% of subscribers compared to 7.5% in Q3 2023, according to research firm LightShed Partners.

But it’s not only the subscriber increases making the streaming business seem more robust after the post-pandemic slowdown. Of the major streaming service owners that break out streaming-specific profit-loss figures, all recorded either lessening losses or growing profits:

• Disney (operating loss): -$420 million (70% improvement)
• Fubo (net loss): -$84.4 million (20% improvement)
• Netflix (net cash): $2.0 billion (258% improvement)
• Paramount (adjusted OIBDA): -$238 million (31% improvement)
• Peacock (adjusted EBITDA): -$565 million (8% improvement)
• Warner Bros. Discovery (adjusted EBITDA): $111 million (118% improvement)

To be clear, these profitability improvements are largely because of the writers’ and actors’ strikes, which created the studio equivalent of a student loan freeze by putting development deals and productions on pause and lowering the companies’ costs. And it remains to be seen what impact the strikes will actually have on streaming subscription businesses. The production pause has yet to significantly preempt streamers’ programming lineups, with shows like Disney+’s “Ahsoka,” Hulu’s “Only Murders in the Building” and Netflix’s “One Piece” premiering new seasons in Q3.

With the companies expected by industry insiders to keep their costs constrained coming out of the strikes, it won’t be for another year or two that the combination of that belt-tightening plus the post-strike production logjam could impair streamers’ lineups of new shows and movies, at which point the pendulum could swing back from the current subscriber growth re-acceleration to yet another slowdown. Consider that the only company to have flipped its streaming business from loss to profit in Q3 — WBD — was also the only one that lost subscribers in the period.

What we’ve heard

“Generally speaking, the community still wants to drive this [measurement shift] forward because of the challenges with Nielsen and the costs of Nielsen. So being able to negotiate on C3 and C7 is okay, but it doesn’t advance anything we need.”

— Agency executive on Nielsen delaying its deprecation of its legacy TV ad measurements

Numbers to know

600,000: Estimated number of subscribers that YouTube TV added in the third quarter of 2023.

-64%: Percentage decline year over year in the number of films that Paramount+ has in its programming library.

5.4: Number of streaming apps that the average U.S. household has installed on their smart TV.

What we’ve covered

Influencer or creator? Here’s how marketers can know who to hire:

• Marketers are making a not-totally-clear distinction between influencers and creators.
• Apparently, creators have historically been considered for performance marketing campaigns and influencers for brand awareness efforts.

Read more about creators (and/or influencers) here.

TikTok’s and Instagram’s importance to marketers jumps during the holidays:

• TikTok’s role in marketers’ media mixes increases the most of any channel during the holiday season.
• Instagram also sees a surge.

Read more about TikTok and Instagram here.

Snap’s new president of Americas and global partnerships talks returning to revenue growth after a rocky 2023:

• Former Meta exec Patrick Harris joined Snap as svp of partnerships in May and then was promoted in September after Rob Wilk left the company.
• After consecutive revenue growth declines, Snap reported a 5% year-over-year increase in Q3 2023.

Read more about Snap here.

What we’re reading

Warner Bros. Discovery’s chief cost-cutter:

The merger of Warner Bros. and Discovery made David Zaslav a major media mogul. But his legacy in the role so far has been more that of money manager, according to The New York Times Magazine.

Univision’s political pivot:

The Spanish-language TV news network aired a softball interview with former President Donald Trump and declined to run ads for President Joe Biden’s campaign, according to The Washington Post, leading one of its anchors, León Krauze, to quit.

FTC ups influencer marketing disclosure enforcement:

The regulator warned some marketers and influencers that they had not properly disclosed the sponsor relationships behind content posted online, such as by not naming the sponsor, according to Ad Age.

YouTube starts selling standalone Shorts ads:

YouTube is testing a program to allow advertisers to exclusively buy ads to run against Shorts as opposed to its TikTok clone’s inventory being bundled with its legacy long-form video ad supply, according to AdExchanger.