Betting on the Streaming Wars: Predicting Subscriber Growth

The streaming wars are heating up as companies like Netflix, Disney, HBO, Apple, and others compete for subscribers. With new streaming services launching and existing ones expanding their content libraries, there is a lot at stake. For investors and industry analysts, predicting how many subscribers each service will have is key to understanding their growth potential.

Here are some of the factors to consider when forecasting subscriber numbers for the major streaming platforms.

Netflix’s Dominance and Churn

As the streaming pioneer, Netflix still dominates with over 282 million subscribers globally. However, after a decade of rapid expansion, Netflix is approaching saturation in the U.S. market. While international growth remains strong, the days of effortless domestic subscriber additions are over.

In 2022, Netflix reported its first subscriber loss in over a decade, shedding over one million subscribers worldwide. This shock loss signals greater challenges ahead as competition intensifies. To keep growing, Netflix will need to reduce churn by providing a stellar content library and user experience. Minimizing cancelations will be just as important as attracting new signups.

Disney’s Bundled Service Strategy

Disney+ has seen meteoric growth since launching in 2019, reaching over 158 million subscribers in just five years. This rapid ascent has been fueled by Disney’s bundled service strategy. By packaging Disney+ with Hulu and ESPN+, the media giant has created an appealing subscription bundle.

Going forward, Disney will continue using this bundling strategy to drive higher subscriber numbers. Partnerships with telecoms like Verizon also help Disney+ reach new audiences. With Disney’s arsenal of popular brands and franchises, expect strong ongoing growth, especially internationally where penetration is still low.

HBO Max’s Slower Start

While Disney’s entry into streaming has been an undisputed success, the road has been rockier for HBO Max. Though HBO has an acclaimed content library, HBO Max has just over 110 million subscribers – a modest start compared to Netflix and Disney.

Several factors have impacted HBO Max’s ability to rapidly scale subscribers. As a newer service launched in 2020, HBO Max does not have the long track record of Netflix or HBO’s cable service. Confusion over how HBO Max differs from regular HBO has also muted uptake. And a lack of presence on Roku and Amazon devices early on limited addressable households.

Now that device availability and brand recognition have improved, HBO Max may see accelerated growth. Its focus on quality over quantity could appeal to streaming audiences overwhelmed by choice. But HBO Max will likely continue adding subscribers at a more restrained pace than Disney.

Apple TV+: Leveraging a Loyal Ecosystem

As the tech giant’s first foray into streaming video, Apple TV+ has over 25 million subscribers since launching in 2019. While dwarfed by larger services, Apple TV+ has succeeded in leveraging Apple’s loyal ecosystem of device owners.

Due to Apple’s massive iPhone installed base, Apple TV+ instantly had hundreds of millions of potential users. By strategically bundling free Apple TV+ subscriptions with new device purchases, Apple has converted a slice of its base into paying subscribers.

Looking ahead, Apple TV+ may see steadier, more gradual subscriber growth than rivals. Apple will continue relying on device sales and bundles rather than blockbuster original content. Integrating Apple TV+ deeper into its products will be the primary driver.

Amazon Prime’s Built-In Audience

With over 220 million Prime members worldwide, Amazon already has a massive built-in audience for its streaming video platform Prime Video. Leveraging its ecommerce subscription model, Amazon offers video streaming as a key perk to Prime memberships. This bundling strategy has enabled Prime Video to become a major force in the streaming landscape.

Though smaller than rivals like Netflix and Disney+, Prime Video stands apart with its extensive integration into Amazon’s broader ecosystem. Viewers can easily access titles through Amazon Fire TV devices, Fire tablets, Echo smart displays, and more. Backed by a tech giant with vast resources, Prime Video has invested heavily in original content to drive engagement.

Major franchises like The Lord of the Rings, combined with popular licensed shows, make Prime Video a must-have for many households. Going forward, Prime Video’s subscriber growth will continue being powered by Amazon’s enormous Prime membership base. With streamlined access and bundling advantages, Prime Video has plenty of runway for expansion.

How Advertising-Supported Tiers Could Impact Subscriber Growth

In response to plateauing subscriber numbers in saturated markets like the U.S., major streaming platforms like Netflix and Disney+ introduced ad-supported tiers in late 2022. The strategic addition of these cheaper, ad-funded plans will influence subscriber growth going forward.

Appealing to Cost-Conscious Consumers

Ad-supported plans provide a lower cost alternative that could entice price-sensitive viewers not willing to pay premium rates for commercial-free experiences. Services can pitch ad tiers as a budget-friendly option, expanding their target demographic. This could unlock growth from value-oriented consumers seeking entertainment on a tight budget.

However, the actual price differential needs to be compelling enough to drive signups.

Driving Incremental Revenue Through Ads

For platforms like Netflix and Disney+, ads represent an opportunity to generate substantial new revenue that can fund content investments and global expansion. Trading some commercial interruption for upside revenue potential helps diversify their businesses.

While adding an ad tier may depress higher-priced subscriber numbers slightly, the trade-off could drive higher overall revenue. As long as platforms limit ads and retain plenty of commercial-free inventory, the impact on churn should be minimal. Done right, ad tiers enhance monetization more than they cannibalize full-price subscribers.

Muting Impact of Account Sharing Crackdowns

Another motivation behind ad-supported plans relates to account sharing crackdowns. Streaming services are tightening password sharing rules to capture revenue from millions of non-paying viewers. By offering a low-cost, ad-supported option, they encourage account sharers to become legitimate users.

Rather than lose access, viewers can opt into the ad tier at a reduced rate. This minimizes subscriber losses due to sharing enforcement while monetizing previously unpaid viewers. Ad-supported plans provide a conversion path for would-be account sharers.

The Deciding Factors

In the streaming wars, subscriber numbers represent market share and signal momentum. When forecasting growth, analysts weigh factors like content libraries, pricing, brand awareness, distribution advantages and vulnerabilities.

This information can help bettors make educated predictions about future streaming subscriber numbers.