Parrot Analytics presented its “Q2 2022 Quarterly Report Card” on the state of the streaming industry. The company analyzed the major platforms from the five media companies that control over two thirds of all US demand for TV content: Disney, Warner Bros. Discovery, Paramount, NBCUniversal, and Netflix.
The global leader in streaming lost roughly one million subscribers worldwide between April and June 2022, but that was significantly lower than the expected two million subscriber loss the company announced in April. This coincided with a four percentage point drop in global demand share for streaming originals, a key leading indicator of SVOD subscriber growth.
It was Netflix’s largest quarterly market share loss since Q4 2019, when Apple TV+ and Disney+ debuted. Despite record audience demand for “Stranger Things” season four, Netflix’s total global demand for original content was virtually flat, up just 1.8%, compared to a 17.9% increase for original content from its rivals.
Netflix is projecting to add subscribers again next quarter for the first time since Q4 2021, and the final episodes of “Stranger Things” season four alone could help them get over the hump. While the competition will continue to erode Netflix’s market share for original content, Parrot noted that Netflix is the only company in entertainment that is actually profiting from streaming.
Disney+’s continued growth quarter after quarter is a testament to the platform’s ability to create new, highly in-demand series built around its core franchise pillars that attracts fans in new countries each quarter. As Disney+ expands its offering globally, this also means broadening the type of content that is available to Disney+ subscribers, including more adult fare like “Pam and Tommy,” which became a top title on Disney+ outside of the United States this quarter.
As its competitors lean more into children’s and young adult programming, Disney+ has remained a top contender in the space thanks to shows like “Bluey” and franchise expansions like the “Olaf” series based on the popular character from “Frozen.” There are two major hurdles that Disney still faces: generating stronger average revenue per user (ARPU) for Disney+ in both domestic and international regions, and building out a stronger four quadrant service to continue scaling at the speed Disney executives want to scale at.
● HBO MAX
Warner Bros. Discovery controls 17.8% of total platform demand in the United States when compared to other SVOD catalogs. HBO Max’s demand has grown on its own consistently thanks to its focus on crafting dramas, comedies, and animated series that appeal to fans of genre entertainment (DC series), previously underserved audiences on its platform (teen girls), and high impact series that grew through word of mouth (“Station Eleven”).
A crucial part of HBO Max’s strength is the ability to curate the next hit by relying on tastemakers, prescribing what the next trend in entertainment is rather than respond to it. HBO Max feels lean, but strong, built on shows from the best creators that fulfill a necessary space for different taste clusters and the overarching mainstream audience.
With Discovery+ now entering the fold, the biggest question about HBO Max is not so much subscriber growth but subscriber satisfaction. This will be answered in overall demand share over the next 24 months, but HBO Max is one of the few streaming services that has cemented itself as a must-have in people’s homes. According to Parrot, now it has to figure out how to stay that way without feeling like a cluttered platform that accounts for everyone but not necessarily anyone.
Although the demand share for its originals is growing, Peacock is still struggling to find a consistent string of in-demand originals that drive meaningful quarterly growth. Outside of “Bel-Air,” many of Peacock’s original titles fail to hit the exceptional category, which 0.2% of titles reach. This is a category that originals from Disney+, Hulu, HBO Max, and Paramount+ routinely reach.
Peacock’s flat subscriber numbers, in part spurred by better than usual subscriber growth in the quarter prior, reflect the programming struggles, and therefore difficulty in translating perceived value of Peacock to consumers. Looking ahead, Parrot believes Peacock may benefit from a third-party partnership with a retail e-commerce membership program like Walmart+ to bring in customers and increase revenue while building a lineup of programming that draws subscribers across a variety of entry points. If the perceived value of Peacock is harder to sell to customers as a standalone product, the goal is to find other ways to bring subscribers in and increase demand for programming.
“Top Gun: Maverick’s” box office performance was not the only highlight for Paramount Global in the second quarter of 2022. Paramount+ bucked the industry trend by adding nearly 3 million new subscribers in the United States and Canada, accounting for virtually all the SVOD subscriber gains in UCAN across all major services last quarter, as saturation of the entertainment’s most valuable region appears to be setting in.
Growing demand for Paramount+’s slate of originals has powered this growth, as the streamer’s “quality over quantity” strategy for original content seems to be paying off. Demand growth for Paramount+ originals maintained or trailed that of all other streaming services through Q3 2021, but since Q4 2021, demand for Paramount+ originals have grown at a significantly faster pace than that of other services. Since Q1 2021, the total demand for Paramount+ originals grew 76%, much higher than the growth rate of all non-Paramount+ streaming originals, which were up 46%.