Netflix lost subscribers
2022 was the year the unthinkable happened: Netflix lost subscribers. The losses may have been overstated – it’s still one of the biggest on-demand streamers (by subscriber count and per sub revenue). Plus, it clawed back some of its losses by adding 2.4 million subscribers in Q3 of ‘22 and “Wednesday” just became its second-ever English-language TV series to cross 1 billion hours viewed within its first 28 days. However, Netflix’s Q1/Q2 decline was the harbinger of wider changes in the media world.
Revenue became Wall Street’s metric over subscribers, streaming platforms without ad tiers became outliers, and it’s now widely accepted that consumers defecting to better offerings, churn, is here to stay. In Q3 of 2022, Antenna reported 32 million cancellations of the 10 SVOD services.
Free ad-supported television continued to grow
Free ad-supported television continued to grow and ad revenue hit $4billion in the US driven by a 49% increase in viewers in the region. Aside from Roku, the biggest players are those owned by larger media companies – Paramount owns PlutoTV, Fox owns Tubi, Freevee is Amazon’s FAST service – or those merging to compete like HBO Max and Discovery+.
Revenue from FAST is nowhere near that of subscription streaming, but what is in sharper focus this year more than any other is how critical FAST has become to the streaming ecosystem. A free streaming service allows big media companies to meet customers' demands for better value and more options, deterring them from defecting to another provider. This, paradoxically, creates a funnel to paid services with teaser or spinoff content and interstitial ads.
FAST originals became a thing
On the topic of retaining audiences – 2022 was the year of FAST originals. In November, the Roku channel launched its biggest budget original production to date "Weird: The Al Yankovic Story" starring Daniel Radcliffe, and Tubi released a whole slate (over 20) of original television movies.
Pluto TV, however, has steered clear of original movies or series; its 72 million monthly active users (as of Q3 ‘22) tune in for dedicated channels like the “Tosh.0”. In an interview with Hollywood Reporter, Tom Ryan, head of streaming at Paramount said that “the ideal programming for FAST TV is large franchises that have a high volume of content and self-contained episodes” because they encourage binge watching. When viewing hours (HOV) are the measure of success, this sort of content is cheaper to produce and is more likely to rack up HOV off the bat.
Discovery and Warner Bros merged
Speaking of content strategies, AT&T and Discovery completed a merger in April ‘22 creating the biggest entertainment brand on the planet. As part of the merger, Warner Bros Discovery CEO David Zaslav announced that streaming services HBO Max and Discovery+ would be combined in the US by mid-2023 and a free ad-supported option added to the service. Zaslav's approach is a far cry from his predecessor Jason Kilar's who was a big believer in streaming first, especially for theatrical releases. The name for the new super-streamer is pending, but its creation only proves there is a push to create self-contained content ecosystems that support all forms of entertainment life.
International expansion is still the key to survival
While the streaming video on-demand tactic of creating originals to draw in audiences isn’t ubiquitous across FAST just yet, expanding local-language content is – and remains a focus across streaming as a whole. The move, straight out of the Netflix playbook, has intensified competition between platforms in Latin America and given rise to US FAST platforms like Distro TV launching 120 dedicated Spanish channels on DistroTV Espanõl.
2023 – no shortage of entertainment
It’s been a big, tumultuous year for streaming: incumbents have been rattled, churn has forced media companies to diversify, merge and make hard decisions to retain viewers, and FAST has experienced huge growth as a result. It will be fascinating to see how these trends play out in 2023.