Only three U.S. video subscription services have managed to turn a profit in the 17 years since Netflix launched the streaming revolution: Netflix, Hulu, and most recently Warner Bros. Discovery.
One reason is that video streaming services have done a terrible job at keeping subscribers. In the last four years, the weighted average churn rate for U.S. streamers has almost tripled to 5.5%, according to a new report from the streaming analytics firm Antenna.
In 2023, that meant that, although streamers gained 164.7 million gross subscriptions, they also recorded 140 million cancellations, leaving them with a net of 24.2 million new subscriptions.
On top of that, gross subscriptions are slowing down. Subscription growth fell to 10.1% year-over-year in 2023, down from 21.6% in 2022.
Why streamers are losing subscribers
Recent trends in the industry — such as a crackdown on passwords, price hikes, and additional advertising — has turned off consumers and has led to a rise in visits to piracy websites.
Netflix, Disney+, Hulu, and Spotify all increased their rates in 2023, with Netflix and Disney+ adding ad spots to some of their formerly commercial-free plans in late 2022.
Some streamers have already lost net subscribers this past year. Subscribers to Disney+ fell 7% to 150 million in the three months ending Dec. 30, from 160 million, while Hulu’s subscribers in the same time period fell 3% to 48 million.
In Antenna’s Q1’24 State of Subscriptions Report, the firm said streamers are now entering into a new era where they need to focus on retention.
“The previous stage was hyper-focused on acquisition – which made sense, as these new brands had to establish a mass audience,” Antenna CEO Jonathan Carson wrote in the report. “But now that the largest players have that scale (and the niche players have introduced themselves to their target audiences), they must shift their focus to managing their subscribers.”
Not all the news lately is bad. Antenna pointed out that one in three users who cancel a subscription to a streaming service come back within six months.