Where Do Niche Streamers Fit in a Sea of Services?

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Streamers from AMC Networks and WWE to nonfiction programmer CuriosityStream and the BBC-ITV joint venture BritBox are finding that there is no room for error as the field crowds.

As Disney+, HBO Max, Peacock and Apple TV+ launch billion-dollar programming budgets in search of scale, will that leave smaller streaming services hurting?

In this group, streamers from AMC Networks and WWE to nonfiction programmer CuriosityStream and the BBC-ITV joint venture BritBox are finding that there is no room for error as the field crowds.

But as MoffettNathanson analyst Michael Nathanson put it in a Nov. 1 research note, the question AMC faces is “whether it can make this strategic transformation, or build a ‘lifeboat,’ fast enough to offset the declines in the traditional business.”

Clearly, these companies think the market is big enough to support their ambitions, especially with such smaller content spends. AMC Networks CEO Josh Sapan told analysts Oct. 31 that the addressable market for its offerings, which include Anglophile-focused Acorn TV ($5.99 per month) and horror-centric Shudder ($5.99 per month), is “in excess of 10 million subs for each.”

But 10 million subscribers is modest compared to the stated targets from HBO Max and Disney+, both of which expect to have more than 60 million subscribers by 2025. Sapan argued that while the big streamers fight a price battle to the bottom, niche services are “superior” because “there’s not the same pressure on retail price,” noting that Acorn TV raised its prices without impacting growth.

It was a comment echoed by WWE co-president George Barrios, who told analysts that WWE Network ($9.99 per month, 1.5 million subs) has “a fundamentally different value proposition” than the general entertainment services.

Discovery Inc. CEO David Zaslav, speaking on the company’s earnings call Thursday, predicted that only three or four big general entertainment streamers would survive, adding that "it is going to be a lot of carnage” as they compete.

For smaller players, however, the nascent size of the market also presents opportunities.

“If you look in the U.S. at the number of streaming services that have more than 200,000 subscribers, you can count them on your fingers and toes,” says CuriosityStream president-CEO Clint Stinchcomb.

To help spur early growth, niche services are using the targeting capabilities of tech giants like Amazon, Roku and Apple to drive new subscriptions (in exchange for a cut of revenue). AMC Networks is among the companies that make their services available through these intermediaries.

“This scenario is exactly why we are seeing increasing interest in aggregation services like Amazon Channels, Roku Channel, even Apple channels now,” says Brett Sappington, senior research director for Parks Associates.

The goal? Hold on to favorable margins. Sappington says consumers are willing to pay more for a service that fits specific needs.

“By and large, consumers will pay for the content that they want,” he says. “When you are talking $1, $2 or $5, that may not be enough to dissuade consumers from getting that content.”

Another option is to get creative with bundling. While Disney+ is leveraging a deal with Verizon and Apple is giving away Apple TV+ with the purchase of new hardware, smaller services can forge their own deals. (“If you are a big, big company, you have lots of levers you can pull,” Stinchcomb says.)

CuriosityStream struck deals with cable providers like Altice to offer the service at no extra cost to internet customers. It also strikes deals directly with large companies to offer its service as a corporate perk. Stinchcomb says this year more than 40 companies have signed on.

“They give you nuts, they give you coffee, they give you gym memberships, now they give the gift of curiosity,” says the exec.