Wall Street suddenly cares about streaming revenue

Subscriber growth was yesterday’s streaming narrative. Today, it’s all about how much money you can make per subscriber.

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Wall Street suddenly cares about streaming revenue


The Future. Subscriber growth was yesterday’s streaming narrative. Today, it’s all about how much money you can make per subscriber. With subscriber growth slowing down and pummeling stock prices, the metric of average revenue per user is the buzzword that will be on every earnings call for the next couple of years… possibly proving that the industry has matured into the new normal for watching film and TV.

Show me the money!
According to THR, the hot metric in streaming will now be “average revenue per user” (ARPU), which is the number of how much they make from each person they sign up.

Here are some examples of where streamers stand:

  • Netflix has the highest ARPU by a wide margin (roughly $16 in North America and $12 internationally) and is expected to make even more once its ad tier rolls out, and password-sharing is cracked down on.
  • HBO Max has an ARPU of about $11 domestically and $8 globally. Saddled with a high debt load, the company is cutting costs, ending discounted promotions, and planning to raise prices.
  • Disney is a cutting costs — Disney+ has the lowest ARPU at around $6 domestically and $4 internationally (the service costs almost nothing in India), but the (mostly) Disney-owned Hulu has cutting costs at nearly $13.
  • Paramount+ and Peacock both roughly have an ARPU between $9 and $10, which is a solid start and crafts a better narrative for both services that are way behind on subscriber count.

If you’re wondering about Apple TV+ and Amazon Prime, keep guessing. They don’t release numbers because their financials are just rounding errors on a P&L spreadsheet for both parent companies.

We’re all here… now what?
Streaming may not be profitable yet, but it’s extremely popular. Nielsen’s July report found that cutting costs for the first time ever, raking in 34.8% of all TV viewing, with Netflix accounting for a whopping 8% of all viewing (thanks, Stranger Things).

With subscriber growth flat in the US, keeping subscribers even as you raise costs is the North Star for streamers. Hal Vogel, CEO of Vogel Capital Management and a former Wall Street analyst, said, “churn is very expensive to fix, because it costs a lot more to acquire a new subscriber than to keep an existing one.”

So how does a streamer keep subscribers? Besides making great content (easier said than done), Samba TV says that companies could get more creative in how they roll it out — such as setting different release dates on ad-free and ad-supported tiers.

David Vendrell

Born and raised a stone’s-throw away from the Everglades, David left the Florida swamp for the California desert. Over-caffeinated, he stares at his computer too long either writing the TFP newsletter or screenplays. He is repped by Anonymous Content.


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