A New Era of Slower Streaming Growth Has Already Begun

Illustration of a streaming play button
Cheyne Gateley/VIP+

It’s one of the more pressing questions facing the streaming business right now: Was Q2 just a blip, or has streaming finally entered a new era of slowed growth?

Despite some robust international expansion, the last quarter saw a slowdown in the domestic market for many of the major SVOD services. Netflix lost 1.3 million subscribers — the biggest domestic decline for its streaming service to date — while Disney+ added just 100,000 members in the U.S. and Canada, marking its own worst quarter since launching in 2019. NBCUniversal’s Peacock “stayed relatively flat,” according to Comcast’s earnings release, stalling out at 13 million paid subscribers less than two years after launch.

Meanwhile, Warner Bros. Discovery’s direct-to-consumer platforms — HBO, HBO Max and Discovery+, whose user bases were lumped together in WBD’s latest quarterly report — lost 300,000 subscribers, even when accounting for the company’s “new harmonized definition” of a paid subscriber, which eliminated about 10 million accounts from the tally.

Consumers are still adding subscriptions, albeit at a lower rate; there were 31 million gross additions in the U.S. in Q2, down 18 percent from Q1, while cancellations remained constant at 28.5 million. It all added up to a quarter that saw net U.S. subscriber gains at their lowest point since 2018, according to analytics firm Antenna — in other words, before major players like Disney+ and HBO Max had entered the streaming wars.

With that in mind, any streamer looking at those numbers must be concerned. This was not just a slower quarter for the market but a historically slow one, with subscriptions growing just 1.2 percent quarter-on-quarter, the lowest rate since Antenna began tracking the data in 2017. The great streaming slowdown everyone has been fearing is, it seems, finally beginning to manifest in earnest.

Of course, streaming remains highly popular among consumers, and its usage is likely to continue growing over time. Streaming’s share of TV viewing time rose throughout Q2, hitting record highs each month, according to Nielsen data. And the average number of services accessed per household ticked up in Q2 after plateauing the previous quarter, while household penetration also rose, per Kantar.

According to Conviva’s latest “State of Streaming” report, however, total streaming viewing time in North America rose by just 5 percent in Q2, an indicator of the streaming market’s maturity in the region. Indeed, the high level of household penetration indicates that the domestic streaming market is running out of room to grow substantially. This figure will likely continue to inch upwards, but there are too few holdouts remaining at this point for streaming’s massive growth to continue.

It appears likely, then, that domestic subscription growth will remain below historical levels in Q3 and possibly beyond. The results of a recent survey by SmithGeiger indicate as much, with a majority of those polled about their streaming subscriptions saying they planned to neither add nor cancel a service in the next month. The streaming business is apparently settling into something resembling stability.

Indeed, this is the issue at hand: A business that became accustomed to soaring growth must now adjust to that growth slowing, and transform from an ascendant business to a stable, long-term one. Streaming, in other words, is becoming what the cable business used to be — albeit with a much lower barrier for cancellation should consumers tire of a service.

That last point, already a major concern for streamers, will continue to be a key issue as the market matures further. With marquee titles like “Stranger Things” and “Obi-Wan Kenobi” failing to prevent the historic slowdown in Q2, it’s clear that more than blockbuster content is needed to lessen churn.

The solution, in all likelihood, will be for streaming’s transformation into cable to accelerate: bundles, advertising, linear channels and maybe, one day, the return of long-term contracts. When that era is finally in full swing, its origin will likely be traced back to the second quarter of 2022.