Executives from the Hallmark Channel made a curious decision this fall: They started a new streaming service.
It seemed like an awfully late date to do so. Most media companies entered the streaming fray years ago, and few have had success going head-to-head against titans like Netflix, Amazon and Disney.
But Hallmark executives decided the timing was not an issue. Their app, Hallmark+, did not need to appeal to the whole country, they said, just their core audience — the people who regularly flock en masse to the network’s trademark holiday and feel-good programming.
“We don’t have to make content that are all things to all people,” said John Matts, Hallmark Media’s chief operating officer.
He might very well be onto something.
For much of the past decade, conventional wisdom inside the entertainment world has been that only a small handful of megaservices would survive the streaming wars. After all, they had the stars, the budgets and the technological prowess.
But numerous media executives now believe that there could be room for some more modest streaming services, too.
About two dozen smaller, low-cost specialty streaming services have generated significant subscriber growth over the last couple of years, according to a new report from Antenna, a subscription research firm. This includes streamers from traditional cable networks (AMC+, BET+) as well as those that fall under specific genres, including British television (BritBox, Acorn TV), horror (Shudder) and anime (Crunchyroll, Hidive).
“It’s an explosion,” Jonathan Carson, the chief executive of Antenna, said.
In the second quarter of 2022, 24.5 million people bought at least one niche streaming service subscription. That figure more than doubled by the second quarter of this year, to 51.4 million, Antenna said.
Overall, active subscriptions for niche streamers grew 27 percent last year and 20 percent so far this year, outpacing the biggest streaming services. (Those growth rates stood at 17 percent in 2023 and 7 percent this year, Antenna said.)
The shift has arrived despite the deep skepticism that niche streamers could ever really take flight. When Discovery executives took control of Warner Media in 2022, one of their first acts was to pull the plug on CNN+, a $300 million investment that was only a few weeks old. Discovery executives said one of the main reasons for the quick shutdown was that they had taken earlier stabs at smaller, single-topic streamers — including apps for cars, golf and food — and that they had gone terribly.
“We have failed almost at every turn launching these products,” an executive for Discovery said at the time. Instead, they rolled CNN content into Max, a much broader service that includes HBO, the Warner Bros. library and Discovery’s unscripted programming.
But in the two years since CNN+ shut down, the streaming industry has become unpredictable. Wall Street soured on never-ending spending on programming, and media companies rapidly prioritized profits instead of raw subscriber counts.
As a result, media companies have increased subscription prices and cut costs, producing fewer shows. The programs they have made are broader in focus, aiming to reach the largest audience possible. But those changes may have opened the door for specialty services that have far more tailored programming, executives said.
“Ten years ago, it was all about programming that was different and unique,” Robert Schildhouse, the president of BritBox, said about the biggest streaming players. “Now there’s a broadcast-ness that has taken over with the guys who have to program to much broader audiences, and it’s giving room and space to folks who are specialists.”
Still, there are plenty of red flags for niche streamers, which depend on subscriptions.
Cancellation rates are haunting major streaming executives as consumers become increasingly sophisticated in canceling or hopscotching between services. Cancellation rates run even higher among the niche players, according to Antenna.
Niche streamers are also extremely dependent on finding subscribers through streaming marketplaces like Amazon Prime, where viewers can sign up for different services through the app. Nearly 60 percent of subscriptions among niche streaming services in the second quarter came through Amazon’s channels page, according to Antenna. The biggest streamers had only 9 percent of their sales through Amazon. That suggests that people are finding and subscribing to specialty streamers while searching for individual shows and movies, not necessarily seeking out the brands themselves.
Still, executives of smaller streaming services said the bar was lower for them.
“I don’t need 70 million subs to make this thing work,” Mr. Matts, the Hallmark executive, said. “I can do it in the single-digit millions of subs. This can be a really attractive business for us smaller guys, because we don’t need to spend tens of billions of dollars to program.”
Mr. Matts declined to give subscription figures for Hallmark+. BritBox, which started in 2017, said in February that it had just under four million subscribers. Netflix, in comparison, has 282.7 million.
And though the major streamers have driven down programming costs only recently, the smallest have been doing it for years. AMC has a whole fleet of niche streamers, including AMC+, Shudder, Acorn TV and Hidive. Executives said a more frugal approach had long been part of their business model.
“That fiscal behavior has been baked into our strategy from the beginning,” said Dan McDermott, the president of entertainment at AMC Networks. “We’re very careful about how we spend our money.”
Or, as Lisa Hamilton Daly, the head of programming at Hallmark, put it, “We don’t make shows in space.” (A couple of new shows on Hallmark+: “Deck the Halls on Cherry Lane” and “Finding Mr. Christmas.”)
Mr. Carson, the Antenna chief executive, said he could envision a streaming future not unlike magazine newsstands from decades ago. For every mass general interest publication like Time and Life, there were dozens of magazines dedicated to a specialty topic like food, fashion or photography.
“We have 100 years of consumer media usage to tell us that there are special interests, and people are going to have special interests,” he said. “Those aren’t going to go away.”
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