By John Koblin
This fall, executives at the Hallmark Channel made an intriguing choice: they launched a new streaming service.
It appeared to be an unusually late move. Many media companies had dived into streaming years earlier, and few have succeeded in competing against giants like Netflix, Amazon, and Disney.
Nevertheless, Hallmark’s leaders believed that timing wasn’t a problem. Their application, Hallmark+, only needed to resonate with their dedicated viewership—the fans who consistently gather for the network’s signature holiday and uplifting shows.
“Our content doesn’t have to cater to everyone,” stated John Matts, Hallmark Media’s COO.
He may be onto a significant insight.
For a large portion of the previous decade, the consensus in the entertainment sector indicated that a mere handful of megaservices would thrive post-streaming wars. These services boasted stars, substantial budgets, and technological expertise.
However, many media executives are now optimistic that there’s potential for additional, less ambitious streaming services.
According to a recent study by Antenna, a subscription research firm, around two dozen smaller, budget-friendly niche streaming platforms have experienced notable subscriber growth in recent years. This trend includes streaming services affiliated with traditional cable networks (AMC+, BET+) as well as those specializing in specific genres, such as British television (BritBox, Acorn TV), horror (Shudder), and anime (Crunchyroll, Hidive).
“It’s a boom,” remarked Antenna CEO Jonathan Carson.
In Q2 of 2022, 24.5 million individuals subscribed to at least one niche streaming service. By the second quarter of this year, that number had risen to 51.4 million, according to Antenna.
Overall, active subscriptions for niche streamers grew by 27% last year and 20% this year, surpassing the major streaming platforms. (These larger services saw growth rates of 17% in 2023 and 7% this year, as per Antenna.)
This transformation has taken place despite widespread doubt that niche streamers would ever gain significant traction. Following their acquisition of Warner Media in 2022, Discovery executives swiftly terminated CNN+, a $300 million venture that had only been operational for a few weeks. They cited prior failures with smaller, single-theme streamers—such as applications focused on cars, golf, and food—as key factors in their quick decision.
“We have stumbled nearly every time we launched these offerings,” a Discovery executive remarked at that moment. Consequently, they integrated CNN content into Max, a much larger service that includes HBO, the Warner Bros. library, and Discovery’s unscripted content.
However, in the two years following the closure of CNN+, the streaming landscape has become unpredictable. Wall Street has grown weary of endless expenditure on content, and media firms have promptly shifted focus towards profitability instead of merely accumulating subscriber numbers.
As a result, media companies have elevated subscription costs and reduced expenditures, leading to fewer productions. What they do produce tends to have a broad focus, striving to connect with the largest audience possible. Yet, these changes may have created opportunities for specialized services that deliver much more targeted content, as indicated by industry executives.
“A decade ago, differentiation and uniqueness were paramount,” stated Robert Schildhouse, BritBox’s president, regarding the leading streaming services. “Today, there’s a broadcast quality prevalent among those who need to cater to wider audiences, providing room for specialists.”
Still, numerous challenges persist for niche streamers that rely heavily on subscriptions.
High cancellation rates are a significant concern for major streaming leaders as consumers refine their abilities to cancel or navigate between services. Antenna reports that cancellation rates are even steeper among niche platforms.
Niche streamers are incredibly reliant on acquiring subscribers through streaming marketplaces like Amazon Prime, where users can subscribe to various services via the app. Almost 60% of subscriptions for niche services in Q2 originated via Amazon’s channels page, according to Antenna. In contrast, the largest streamers saw only 9% of their revenue derived from Amazon. This indicates that viewers are discovering and subscribing to niche services while looking for specific shows or films rather than actively seeking out those brands.
Nonetheless, leaders of smaller streaming platforms maintain that their benchmarks are more attainable.
“I don’t require 70 million subscribers to make this work,” Matts noted. “I can succeed with just a few million. This presents a highly appealing business opportunity for smaller ventures, as we don’t need to invest tens of billions in programming.”
Matts declined to disclose specific subscription numbers for Hallmark+. BritBox, which launched in 2017, reported in February that it had just under 4 million subscribers, whereas Netflix boasts 282.7 million.
While the major players have only recently begun to cut programming costs, the smaller services have been practicing frugality for years. AMC operates several niche streamers, including AMC+, Shudder, Acorn TV, and Hidive. Executives indicated that their economical approach has long been a cornerstone of their strategy.
“That financial discipline has been integral to our strategy from the outset,” expressed Dan McDermott, president of entertainment at AMC Networks. “We are very prudent regarding our spending.”
