Streaming Services are Running Out of Americans

Netflix’s hit series Squid Game — a phenomenon that inspired thousands of Halloween costumes, Walmart stocking T-shirts with its logo, and a $3.4 million cryptocurrency scam — has taken hold of the zeitgeist like few shows ever do.

It’s also led to barely any new subscribers in the US and Canada, where Netflix added a mere 70,000 new customers in the third quarter. And this week, data released by the streaming site’s competitors show these struggles are as infectious as the cultural phenomenon.

Multiple Choices

Americans have more than 100 streaming services to choose from at this point. One can sign up for Vuele, which sells films as NFTs, or Brown Sugar, which focuses on 70s blaxploitation movies like Shaft.

All this saturation has streaming services spending tens of billions to make thousands of hours of content — Netflix alone will spend $17 billion on programming in 2021 — in hopes of drawing enough eyeballs to keep Wall Street happy. But it isn’t working like it used to:

• Netflix has added a paltry 88,000 subscribers in the US and Canada in 2021 — compared to 6 million new subscribers last year and 3 million in 2019 — more or less flatlining at 74 million.
• This week, Disney+ said it added just 2 million global subscribers in the third quarter, a steep drop from the 12 million, 9 million, and 21 million in the three previous quarters. WarnerMedia’s HBO Max added just 570,000 Americans in the third quarter, versus 2.4 million and 2.8 million in the two before.

America First: US subscribers are incredibly important for one simple reason: they pay more. Half of Netflix’s 4.4 million new subscribers in the third quarter were in Asia, where people pay $9.60 a month on average. Americans pay $14.68. At Disney+, the average subscriber pays just $4.12 a month — a number dragged down by tens of millions of discounts offered through Disney’s Hotstar-branded service in India.

The Bottom Line: The streaming wars are starting to hurt returns. ViacomCBS said last week its streaming expenses will rise by $350 million this quarter, which analysts at MoffettNathanson say will cut the company’s year-over-year profit by 40%.