Three Winners and Losers from the 2022 Streaming Wars
With the year drawing to a close, and the fighting on the streaming battlefield mostly subsided for 2022 as the execs orchestrating the campaigns have retreated to their beach houses in Malibu or to their yachts in the South Pacific, now seems like as good of a time as any to assess the damages that have been sustained during the past year of the Streaming Wars and to celebrate the victories. There have been winners and there have been losers, sometimes to the same regiments, but as look to leave the battles of 2022 to the annuls of history, let us look back at who emerged victorious from the year, and who needs to regroup for battle in 2023.
There was no one in the world of streaming who closed out 2022 on a higher note than YouTube TV. After entering the bidding relatively late in the process, Google’s live TV streaming service walked away with the most prized entertainment property up for grabs in recent memory, NFL Sunday Ticket. The NFL’s out-of-market game package had lived on DIRECTV since its launch in 1994, but as the traditional TV business has continued to erode, the satellite provider decided not to pursue another renewal for the bulk of the rights when its current contract ends at the conclusion of this regular season.
Despite the fact that Apple and Amazon had long been considered the frontrunners to land Sunday Ticket, Google got in the mix over the summer and became a legitimate contender to land the rights when Apple's negotiations hit multiple stumbling blocks.
Thus far, details are fairly thin as to how YouTube will handle the distribution of the package, but the streamer has confirmed that it will not require customers to subscribe to its linear streaming package in order to sign up for Sunday Ticket, although that would provide the most convenient viewing experience. Unlike how DIRECTV managed the package, Google will be offering the out-of-market plan to both YouTube TV customers and via its a la carte YouTube Primetime Channels store, meaning that football fans who still subscribe to cable or another live TV streamer will be able to watch all of the out-of-market games on Sunday afternoons.
As of now, YouTube does not have plans to offer team-specific subscriptions like other league out-of-market packages do, but given the seven-year, $14 billion deal, it’s not surprising that Google would like to avoid giving fans the option to sign up for a discounted tier.
While becoming the first exclusive streaming home for Sunday Ticket is enough to make any streamer a winner, that wasn’t the only monumental success that YouTube TV saw in 2022. Over the summer, the service announced that it had become the first live TV streamer to eclipse 5 million subscribers.
The next year will undoubtedly be a big one for YouTube TV as it prepares to launch its version of Sunday Ticket. One of the major things that will keep the streamer on the winners’ list for 2023 is if it is able to pull off the launch without any technical hiccups. Live sports — including Sunday ticket — have been plagued with service disruptions of various kinds as they have moved to streaming throughout the year, so Google better bring its tech A-game next football season.
No really, hear me out. I know that the NBCUniversal streamer might only be on the winner’s list because we are grading it on a curve, but Peacock did have a pretty successful year by most standards. It was not a home run, knock-it-out-of-the-park year by any means, but compared to much of the carnage strewn across the rest of the streaming landscape, 2022 can definitely be considered a win for the fledgling — and sometimes floundering — platform.
First and foremost, after seemingly barely keeping its head above water since launching wide in July 2020, this past year has seen exponential growth for the service, doubling its paid subscriber total from 9 million to start the year to 18 million as of early December. Due to the unique setup for the streamer, in which Comcast’s Xfinity internet and cable subscribers receive access to the service’s free tier, the user numbers are north of 30 million, but even at 18M paid customers, that puts Peacock in position to ladder up into the levels of streaming respectability if it can continue this rate of growth in the new year.
Of course, Peacock was never intended to follow the path of its streaming competitors, as Comcast is using it as much as a hybrid streaming hub as it is a video-on-demand service. In the spring, the company announced that Peacock would be at the center of a joint venture with competing cable provider Charter. The deal will see the two cable companies partner on a streaming hub using existing services in their corporate repertoires, putting Peacock front and center for millions more customers.
Coming off of the massive success that Peacock had with its Spanish-language streaming of the World Cup — not to mention the Winter Olympics earlier in the year — Comcast is again telegraphing that it is planning to eliminate the free access for its internet and cable subscribers. While that might hurt the streamer’s overall user totals, it very well could result in another jump in paying customers who have already become accustomed to streaming Peacock content.
Throughout 2022, Peacock has reclaimed the next-day streaming rights to shows that air on Bravo, as well as the rest of NBCU's broadcast and cable channels, meaning that millions of people who currently have free access to those programs might be willing to pay as little as $4.99 to keep it.
With Peacock entering into a distribution deal with Hallmark, that is another major victory for the streamer that is cultivating a lean-back, non-prestige vibe which sets it apart from its streaming competitors.
As the long tail of the COVID-19 pandemic continues to impact seemingly all areas of everyday life, inflation rises, the supply-chain experiences worldwide issues, and general economic uncertainty persists, household budgets became even more of a concern for millions of consumers around the world in 2022. When the idea of cord-cutting began to take hold more than a decade ago, the thought was that it would allow people to spend less while still getting all (or at least most) of the entertainment that they wanted.
However, as streaming has become a cornerstone for practically every media company looking to hold onto its place in the ever-evolving landscape, prices for subscription video-on-demand (SVOD) services and live TV streamers have risen dramatically to the point where cutting the cord is now practically just as expensive as keeping it intact (more on this in the Losers section).
Fortunately for budget-wary viewers, 2022 saw a rapid expansion of lower-cost streaming options, including a massive adoption of free streaming services. The biggest headlines in this corner of the streaming world were that Netflix and Disney+ launched ad-supported tiers to their subscription services, giving customers the ability to stream each platform’s content at a cheaper rate than the ad-free premium tiers. Of course, Netflix’s Basic with Ads doesn't come with access to its entire content library and Disney+ Basic with Ads is the same price as the ad-free tier was before the Dec. 8 price increases, but with streaming services raising their prices at alarming rates, even a lateral move for a less premium product feels like a win.
However, while ad-supported video-on-demand (AVOD) services got most of the headlines in 2022, it was another low-cost streaming format that really thrived, or more accurately, a no-cost streaming format. Over the past year, free ad-supported streaming television (FAST) has taken off incredibly quickly (pun intended). These streaming platforms — like Tubi, the Roku Channel, Pluto TV, Freevee, and others — have seen dramatic increases in viewership over the past year as they have routinely added more and more channels to their lineups.
FAST services provide a viewing option akin to that of traditional TV; an episode or movie airs at a certain time, there are commercial breaks, and if you miss it, you better hope you can catch it the next time around. There are no on-demand options for viewing, but that’s really not the point of FAST. In most cases, these channels provide programming around a specific genre (Westerns, horror, rom-coms) or specific shows (“Jeopardy!,” “Project Runway,” “CSI”) so that viewers will know what they are getting when they tune in but don’t have to watch in any specific order.
The inherent lean-back nature of FAST channels has become incredibly popular with viewers who are tired of having to spend 15 to 20 minutes sorting through various menus to find something to watch on streaming. Instead, they can easily resort to a nostalgic viewing option that allows them to watch something that makes them feel comfortable, and they can do it for free.
Tubi recently announced that it grew to a total of 1.3 billion hours streamed in the third quarter of 2022. Pluto hit 72 million active users and The Roku Channel climbed to 65.4M.
As economic conditions continue to be uncertain across the country, it would not be a surprise if FAST and AVOD platforms have an even better 2023 than they did 2022.
Warner Bros. Discovery
Despite the fact that HBO and HBO Max continued their Emmy Awards dominance in 2022, in many ways, it was a terrible, horrible, no-good, very bad year for folks at the newly merged Warner Bros. Discovery. Discovery officially acquired WarnerMedia from AT&T in the spring and immediately began making dramatic changes and cuts.
The first big swing of the executioner's ax was on the ill-fated CNN+ which had launched in the final weeks of the WarnerMedia reign. From there, WBD CEO David Zaslav began firing staff members around the world, shutting down European production, and canceling multi-million dollar projects that had essentially already been completed, opting instead to take a tax write off.
These moves were tied directly to the fact that the new company had to absorb a ballooning $5+ billion in merger-related costs, but the ruthlessness with which they were seemingly carried out has angered customers and creators alike to the point where Zaslav might be damaging HBO Max beyond repair.
The prestige associated with anything HBO is a major force behind the company’s five decades of success, but Zaslav’s background is in running a company that produces cheap, cookie-cutter (but admittedly still entertaining) programs focusing on home renovation, baking, true crime, and dating; a far cry from the traditional, creatively innovative HBO fare.
WBD is planning on merging discovery+ and HBO Max into a single streaming service in the spring under the truly underwhelming name “Max” (there’s still time to reconsider that decision, David. “DiscoMax” is sitting right there for the taking.). While, again, this decision makes sense from a financial standpoint, as it will cut down on the overhead of operating multiple streamers, WBD has openly discussed how disparate the audiences for its two services are and considering that discovery+ costs just $4.99 or $6.99 per month, finding a price point that will keep them happy when merging with the $9.99 or $14.99 HBO Max might be difficult.
By removing content from HBO Max in order to further monetize it through licensing agreements and adding commercials to HBO content for the first time ever, Zaslav and the other Warner Bros. Discovery executives might be making moves to keep the company financially afloat, but in doing so, they might have done so much damage to the boat, that it will never row the same way again.
There have no doubt been victories for Netflix this year, especially on the content side. From the successful return seasons of “Stranger Things,” “Bridgerton,” and “Ozark” to some of the most popular new series in the platform’s history like “Inventing Anna,” “Dahmer – Monster: The Jeffrey Dahmer Story,” and “Wednesday” to successful original movie releases like “The Gray Man,” “The Adam Project,” “Purple Hearts,” and “Glass Onion: A Knives Out Mystery” company co-CEOs Reed Hastings and Ted Sarandos are almost certainly puffing their chests out as 2022 comes to a close.
But in stepping away from the programming success that the world’s largest streamer is inevitably going to have every year, the past 12 months brought on more stumbling blocks than successes for Netflix. In April, the company announced that the first quarter of the year saw its first quarterly subscriber decline in a decade and that was followed by a second customer drop in Q2, resulting in the company announcing swift and dramatic changes that essentially changed the entire ethos of what the company had stood for since its inception.
While Netflix recovered those subscriber losses in Q3, the streamer is still down 1.8M customers for the year in the U.S. and Canada, showing that the growth is coming from expansion into new markets, not from enticing customers who had previously chosen not to sign up to change their minds. However, that was one of the major goals that the streaming giant hoped to accomplish when it hastily announced that it would do an about-face on one of its core principles and launch an ad-supported subscription option — just five weeks after it said that the “timing wasn't right.”
Although many Wall Street insiders anticipated practically immediate, major financial returns for the company as it pivoted to ad-supported streaming, others cautioned that, again, analysts were getting over their skis in predicting massive gains in an industry already stretched too thin. While Netflix Basic with Ads only launched on Nov. 3, in its first month, it was reportedly the least popular subscription tier on the service for new customers. Also, the streamer oversold its advertising allotment for the remainder of Q4, meaning that it had to refund money to some companies because it couldn’t deliver the guaranteed number of ad spots by the end of the year.
Will Netflix’s ad-supported tier become successful in 2023? Maybe? Probably? Who knows? But just the fact that the company had to break the seal on its worst-case scenario option tells you everything that you need to know about how things went for the streamer in 2022.
However, that wasn’t the only major reversal for Netflix this calendar year. Despite having actively promoted customers' ability to share their account passwords with friends and family for years, once subscriber totals began declining, the company signaled plans to begin cracking down on password sharing in the spring, and throughout the year ran tests around the world, specifically in Latin America.
As the streamer began making plans to roll out its new policies domestically and around the world in 2023, its efforts were met with frustration, cancellations, and even protests in the markets targeted with the tests
While the specifics of how Netflix will address password sharing next year are not completely clear, it will likely involve the unpaying account user being logged out and prompted to either create a separate account of their own or to add a sub-account on the main subscriber’s existing account. While it is unclear how many new full or sub-accounts this will create for Netflix, with a reported 100 million households using the service without paying for it, the streamer sees those users who are engaging with its content, but not paying for it, as a way to increase revenue as the service begins running out of potential customers around the world.
Whether these efforts will be more successful than Netflix's original tests or not is still yet to be seen, but the desperate and dramatic turns for the company in 2022 show just how nervous executives are about the future of the company.
If you’ve made it this far in the article, you might be thinking, “Didn’t this guy just tell me that cost-conscious customers were a winner this year?” And yes, you are absolutely right, but — like many of us — the world of streaming contains multitudes, and with every winner, there is a loser. One of the reasons that AVOD and FAST services have become increasingly popular throughout 2022 is that SVOD and live TV streaming services have routinely raised their rates so much that they have been effectively pricing out their customer pool.
In 2022 alone, Apple TV+, Disney+, fuboTV, Hulu, Hulu + Live TV, ESPN+, Prime Video, and Sling TV all raised their prices, and DIRECTV STREAM will do so in January 2023. With Paramount+ also telegraphing an upcoming price increase, it is difficult for streamers on a budget to find a port in the storm.
The major reason that so many streaming services are raising prices (beyond the obvious corporate greed) is that Wall Street is no longer rewarding subscriber gains at all costs. As the streaming market reaches maturity and saturation, especially in the United States, the industry is pivoting from raw subscriber totals to average revenue per unit/user (ARPU) as its driving metric. This has resulted not only in price increases but also a subtle scaling back of production budgets — another thing that will likely lessen the viewing experience long term.
As mentioned above, when cord-cutting began coming into vogue in the late aughts, the goal was to be able to get all of the entertainment you could want without having to pay the exorbitant prices that cable and satellite providers were charging. While a traditional TV subscription is still slightly more expensive than stacking all of the major SVOD services, that gap is closing, and it would not come as a surprise if reattaching the cord becomes the more affordable option for premium content in 2023.