The Rise of Specialty Streaming Services: 4 Things You Need to Know

The entertainment media landscape has changed considerably in the 21st century, evolving from consolidated cable packages to a plethora of direct-to-consumer, video-on-demand (VOD) streaming platforms. Netflix, an early streaming innovator, is still the most popular platform worldwide with more than 275 million subscribers in 2024. However, the streaming giant faces increased competition as streamers like Disney+, Hulu, and Paramount+ vie for subscribers in an increasingly saturated market.

According to data collected by TransUnion and Dynata in October 2023, half of American adults have between two and four monthly streaming service subscriptions. Streaming giants like Netflix and Max offer a broad menu of content catering to general audiences, whereas specialty platforms have deep libraries of audience-specific content and lower subscription fees.

The number of specialty streaming services has gradually increased in recent years, but how do they maintain profitability in an ultra-competitive market? Below is a look at how specialty platforms are serving loyal fanbases, avoiding the churn rate issue plaguing streaming giants, and what the future might hold for all streamers.

Churn Rate Issues for Streaming Giants

With younger people increasingly turning to alternative forms of entertainment, including social media, gaming, and user generated content, it has become more difficult for providers like Netflix and Amazon Prime Video to retain customers. In addition, many people cancel their subscriptions after a few months—or after the newest season of their favorite show has ended—and re-subscribe in the future when they're ready to watch new films or binge new seasons. Churn, a term used to describe consumers frequently unsubscribing from these platforms, has become a major concern for providers in a crowded marketplace.

According to a Deloitte study in 2022, the average churn rate across all streaming platforms in the US was 37%, while 51% of Gen Z and 52% of Millennial streaming service subscribers had canceled, or subscribed and canceled, a streaming service during the last six months. Netflix had some success addressing this issue and increasing subscribers by eliminating password sharing in 2023 but plans to stop disclosing quarterly subscriber figures in 2025.

Along with others, including Peacock and Disney+, Netflix has also introduced several price increases to maintain profitability. It raised its monthly fee for an ad-free premium subscription by 15% to $22.99 in October 2023.

How Specialty Platforms Are Serving Dedicated Fans

Specialty streaming platforms, often offered at lower monthly costs and with curated content serving dedicated fans of specific genres, generally do not have the same churn problem as Netflix and other streaming giants. They may attract fewer subscribers, but customers have shown a greater willingness to continue paying for services with deep libraries that cater to their interests. Instead of having to hunt for a few titles of interest amid a sea of irrelevant content, subscribers enjoy a greater percentage of the platform’s library.

"By definition, you're talking about an interest that is specialty and obscure, and therefore people who are into ... whatever that specialty is, creates loyalty and engagement in a way that perhaps the more generalist services have a much harder task to do," explained Guy Bisson, managing director at Ampere Analysis, speaking to The Hollywood Reporter. "That, again, is one of the advantages that is playing towards these specialty services dedicated fans."

For example, Crunchyroll, an anime streaming platform, had 15 million subscribers worldwide as of June 2024. It also had a low churn rate and in excess of $1 billion in customer spending through not only subscriptions but also manga publishing, games, collectibles, and events. Other notable specialty streamers include the horror-focused Shudder, independent film platform Fandor, and the documentary platform Curiosity, available for just $4 per month on an annual plan. Rather than a limitation, the specialization of these platforms is part of their power.

Specialty Streaming Challenges and Solutions

While specialty platforms might not have the same churn challenges as providers like Netflix and Disney+, they generally have substantially lower marketing and content creation budgets. However, many have found success boosting engagement by securing licensing rights to existing content that fits their agenda.

Accessibility and brand recognition are other among the other challenges, but free ad-supported television (FAST) offerings can help specialty platforms complement subscription fees with advertising revenue and boost brand awareness. Streaming sticks, like Amazon Fire TV and smart TVs, also help these platforms attract new viewers via universal searchability. Partnerships with other distributors are also making specialty streaming platform content more accessible to audiences. Bulk sales of subscriptions to organizations—allowing their members to access content libraries as a perk or benefit—can also be profitable.

The Next Generation of Streaming

While streamers initially had success with ad-free models, consumer habits indicate a substantial shift back into traditional ad-supported content, as long as it means lower monthly subscription fees. FAST was the fastest-growing streaming category in the US in 2023, outpacing VOD streaming by more than 200%. Netflix, Disney+ and others, meanwhile, have introduced ad-supported subscription options at lower rates.

Most major streamers are now concerned with reducing overhead and maximizing profits as opposed to growing subscribers. As a result, the industry is likely to experience significant consolidation in the future. Paramount, for instance, recently eliminated its stand-alone Showtime channel and replaced it with an add-on option for its Paramount+ platform. Disney also purchased Comcast's $8.6 billion stake in Hulu in November 2023, securing full ownership of the streamer.

For now, specialty streamers can survive—and even thrive—on their own, thanks to low costs and exclusive content serving dedicated fans. The most forward-looking services, however, are expanding into FAST and cementing creative partnerships with distributors to multiply the ways audiences can access their content.