The streaming wars didn’t kill the little guys. In fact, they are flourishing

Hallmark Channel executives made a curious decision this fall: They started a new streaming service.

It seemed like a very late date to do this. Most media companies entered the streaming fray years ago, and few have had success in their battle against titans like Netflix, Amazon and Disney.

But Hallmark executives decided timing wasn’t an issue. Their app, Hallmark+, didn’t need to appeal to the entire country, they said, just their core audience: the people who regularly flock to the network’s signature holiday and feel-good programs.

“We don’t have to create content that is of interest to everyone,” said John Matts, Hallmark Media’s chief operating officer.

He could very well be on to something.

For much of the past decade, the conventional wisdom within the entertainment world was that only a small handful of mega-services would survive the streaming wars. After all, they had the stars, the budgets and the technological prowess.

But many media executives now believe there could also be room for more modest streaming services.

About two dozen smaller, low-cost specialty streaming services have generated significant subscriber growth in recent years, according to a new report from Antenna, a subscription research firm. This includes streamers from traditional cable networks (AMC+, BET+) as well as streamers that fall under specific genres, including British television (BritBox, Acorn TV), horror (Shudder), and anime (Crunchyroll, Hidive).

“It’s an explosion,” Antenna CEO Jonathan Carson said.

In the second quarter of 2022, 24.5 million people purchased at least one subscription to a niche streaming service. That figure more than doubled to 51.4 million in the second quarter of this year, Antenna said.

Overall, active subscriptions for niche streamers grew 27% last year and 20% this year, outpacing the largest streaming services. (Those growth rates were 17% in 2023 and 7% this year, according to Antenna.)

The shift has come despite deep skepticism that niche streamers could ever really take off. When Discovery executives took control of Warner Media in 2022, one of their first acts was to spin off CNN+, a $300 million investment that was only a few weeks old. Discovery executives said one of the main reasons for the quick shutdown was that they had made previous attempts to tackle smaller single-topic streamers – including car, golf and food apps – and they had gone terribly.

“We have failed almost every time we launched these products,” a Discovery executive said at the time. Instead, they rolled CNN content into Max, a much broader service that includes HBO, the Warner Bros. library and Discovery’s unscripted programming.

But in the two years since CNN+ closed, the streaming industry has become unpredictable. Wall Street began to struggle with endless programming spending, and media companies quickly prioritized profits over raw subscriber numbers.

As a result, media companies have increased subscription prices and reduced costs, resulting in fewer shows being produced. The programs they have created are broader in scope, with the aim of reaching the largest possible audience. But these changes may have opened the door to specialized services with much more customized programming, executives said.

“Ten years ago it was all about programming that was different and unique,” ​​Robert Schildhouse, the president of BritBox, said of the biggest streaming players. “Now there is a broadcast that has taken over the guys who need to program for a much wider audience, and it gives room and space to people who are specialists.”

Still, there are plenty of warning signs for niche streamers who rely on subscriptions.

Cancellation rates are dogging major streaming executives as consumers become more sophisticated at canceling or hopping between services. According to Antenna, cancellation rates are even higher among niche players.

Niche streamers are also extremely dependent on finding subscribers through streaming marketplaces like Amazon Prime, where viewers can sign up for various services through the app. According to Antenna, nearly 60% of subscriptions to niche streaming services in the second quarter came through Amazon’s channels page. The largest streamers generated only 9% of their revenue through Amazon. That suggests people are finding and subscribing to specialty streamers as they search for individual shows and movies, and not necessarily seeking out the brands themselves.

Still, executives at smaller streaming services said the bar was lower for them.

“I don’t need 70 million subscribers to make this thing work,” Matts said. “I can do it with millions of single-digit subscribers. This can be a very attractive business for us smaller guys because we don’t have to spend tens of billions of dollars on programming.”

Matts declined to provide subscription figures for Hallmark+. BritBox, which started in 2017, said in February it had just under 4 million subscribers. Netflix, by comparison, has 282.7 million.

And while the big streamers have only recently cut programming costs, the smallest have been doing so for years. AMC has a fleet of niche streamers, including AMC+, Shudder, Acorn TV and Hidive. Executives said a more frugal approach had long been part of their business model.

“That fiscal behavior has been baked into our strategy from the beginning,” said Dan McDermott, president of entertainment at AMC Networks. “We are very careful about how we spend our money.”

Or, as Lisa Hamilton Daly, head of programming at Hallmark, put it: “We don’t make shows in space.” (A couple of new shows on Hallmark+: “Deck the Halls on Cherry Lane” and “Finding Mr. Christmas.”)

Carson said he could imagine a streaming future not unlike the magazine newsstands of decades ago. For every mass general interest publication like Time and Life, there were dozens of magazines devoted to a specialty topic like food, fashion, or photography.

“We have 100 years of consumer media use to tell us that there are special interests, and people will have special interests,” he said. “They won’t go away.”

This article originally appeared in The New York Times.