Streaming Profits Are Tough to Find. Niche Movie and TV Platforms See a Way Forward

By now everyone in Hollywood seems to accept that streaming is a cutthroat business. It may not be zero sum (most studies suggest that consumers will pay for about four streaming services at a time), but it is mighty close to it. And with Netflix holding a secure lock on one of those subscriptions for most consumers, there is increasingly little room for error.

But the streaming wars between giant services like Netflix, Prime Video, Disney, Max, Peacock, Paramount+ and others also obscure an entire ecosystem of streaming offerings that are trying to carve out their own niches in an increasingly difficult environment.

For all the press that the big streaming platforms get, there is a surprisingly vibrant world of boutique and specialty streamers chasing loyal and engaged fans at a much smaller scale. And new players continue to enter the space.

In the world of comedy, there is Dropout, born out of the comedy website College Humor. And BuzzFeed veterans-turned YouTubers The Try Guys and Watcher have launched dedicated subscription streaming offerings of their own in recent weeks in an effort to more effectively monetize the sometimes fleeting audience that YouTube or social platforms deliver.

Sony offers CrunchyRoll, an anime-focused service, which boasts 13 million subscribers; AMC Networks operates services like the horror-centric Shudder and the British-focused Acorn TV; and Cineverse operates the horror service Screambox and independent film service Fandor.

"For big companies, they're just never going to go deep enough to serve those fan bases or audiences," says Erick Opeka, the president and chief strategy officer of Cineverse, which lists 1.4 million subscription video on-demand subscribers.

None of these services have ambitions to reach hundreds of millions of subscribers - AMC, which operates a suite of niche streamers has 11.2 million subscribers across all of them - but all believe they can find enough engaged fans to create something that can succeed.

"I say this from a from a place of experience, having been in the ad sales game for over a decade in my time at IAC, and then also spending five years trying to sell television: This [subscriptions] is by far the best business model," says Dropout CEO Sam Reich. "I mean, I would say to any lower- or middle-class media company that this is something they should consider."

It turns out that the limiting factor – the niche or specialty focus of the streaming service – is also the thing that can keep subscribers sticking around, even as they churn through the bigger, broader offerings.

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

And the light, comedic offerings of services like Dropout or The Try Guys' 2nd Try epitomize that ethos.

Zach Kornfeld and Keith Habersberger (aka The Try Guys).

"It's very hard for big networks to produce small shows, and I think they know it," Reich says. "What comedy means to the streamers now is like Only Murders in the Building, which is millions of dollars an episode and 45 minutes and a narrative story with superstars in it.

"I don't think it's a coincidence that so many of these niche streamers popping up are comedy streamers, that we can produce smaller things that charm people," he adds.

"I don't want to say that Hollywood seems to be going crazy with handling how they make things anymore, but I think this is a great opportunity to look at digital creators on YouTube. Not even just us: Lots of people are redefining how to make good stuff, how to tell great stories, different types of faces and people you get to hear those stories from?" says Keith Habersberger, one of The Try Guys. "I think we get to be one of those companies that is doing cool new stuff with new people."

There are, of course, real challenges to surviving as a specialty streamer. Companies like Disney and Netflix pour billions into their technology and product, optimizing the services to bring in new subscribers and keep others engaged.

They also pour tens of billions of dollars into content, so there are new shows and movies every time you open their apps. Smaller streamers, meanwhile, need to use off the shelf technology offerings from the likes of Vimeo, and have content budgets in the millions (or even hundreds of thousands), a far cry from the billions spent by the entertainment giants.

"The big unknown is, can they continue to produce the volume of content that people will expect in exchange for that subscription fee?" Bisson says. "And that's where these services are most likely to fall down."

"People don't sign up for things because they love the idea of another subscription. Lord knows we all have plenty of them," says Zach Kornfeld, one of The Try Guys. "You sign up for things because there is a specific show that you want to watch. And so this is going to live and die by our ability to do what we've always done, which is make great entertainment and deliver the goods."

Niche services also need to stay lean, in both content and technology budget and staffing. It's the only way to make them profitable. It's a far cry from most of the big streamers, which have lost billions in the last year alone trying to catch Netflix.

It's a system that allows for experimentation trying out ideas at a small scale that can build over time.

But it also requires a degree of caution. Netflix can afford to spend $450 million-plus on a pair of Knives Out films, or $150 million on a pair of NFL games, but boutique streamers don't have that luxury.

"We've commissioned original movies and original series at budgets that wouldn't pay for the craft services on a Netflix production," Opeka quips.

"We have to be really smart about our gambles," Reich says. "Without naming names, I think some of our niche competitors have made this mistake where they reach a milestone in terms of viewership, and they go ‘well, in order to compete with the big guys, we need to make a big show.' And for us, the shows that have really gone to work for us in terms of customer acquisition are humble shows that we were able to grow slowly over time, really build audience and use our imagination to develop.

"We make shows that we can afford," Reich adds.

It's streaming at a much smaller scale, but one that many creators hope can sustain a career at a time when the mega streamers are contracting.

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