Subscription Fatigue May Be the Next Front in the Streaming Wars

When did I subscribe to the PBS Passport streaming service? If I had to guess, I would say that pandemic stress and too much wine at dinner one night led, as it sometimes does, to excessive curiosity about America’s national parks. And Ken Burns was there to cash in.

Cord-cutting got me here. I left my cable bundle for the promised simplicity of a broadband-only line. Buy only what I want, I figured. Somehow I have ended up with eight streaming services, not counting free ones, and a bigger bill than before. For each service there’s a password and four user profiles to manage, lest my kids watch Game of Thrones and get ideas about usurping me.

I’ll return to the office around the end of summer, when the kids go back to school, so I plan to cancel some things soon—with three TVs, it’s only a matter of time before I find one of the remotes.

The coming week could bring new clues about whether subscription fatigue is setting in faster than expected.


(ticker: NFLX) reports quarterly results Tuesday evening, and


(T), which owns HBO, reports Thursday morning. In April, Netflix said it had added four million subscribers during the first quarter, but Wall Street was looking for six million, and the shares fell 7% in a day. Since then, the second-quarter new subs estimate has fallen to 1.8 million from 4.4 million.

Walt Disney

(DIS) has cooled, too. In May, it said Disney+ subs reached 103.6 million worldwide, up from 94 million in the prior quarter. But analysts wanted 106 million, and the shares slipped 3%. The still-young service has plenty of growth ahead, but with Disney stock trading some 30% above prepandemic levels, expectations are high. Disney and Paramount+ owner


(VIAC) report results in the first half of August, and


(CMCSA), which owns Peacock, at the end of July.

For the industry as a whole, estimates suggest that new U.S. subs could fall by a third from first-quarter levels. With the economy reopening and sports back in swing, traditional TV broadcasters have gushed about the strength of the so-called upfront selling season for advertising. But TV ratings are in steady decline, and it’s unclear what portion of ad demand will shift this year to streaming services, where rates are generally lower. This year’s ad revenue is sure to compare well with last year’s depressed level, but more telling will be how it stacks up against 2019.

Let’s not overstate the gloom. Disney’s Black Widow opened this month to $80 million domestically, a pandemic record, and even more encouraging, it brought in $60 million from Disney+ subscribers who paid an extra $30 to stream it. Disney offered more detail than usual on the performance, so perhaps it is an anomaly for now, but it’s also a proof of concept for distributing big movies at an uncertain moment for theaters.

ViacomCBS, meanwhile, could double its streaming revenue year over year during the second quarter, not just because Paramount+ is relatively young, but also because Pluto TV, the company’s free, ad-supported platform, is well placed for rising price sensitivity and the shift of TV ad dollars to streaming.

But investors looking to put new dollars to work in media shares might want to wait until after the third quarter, when the scope of subscription fatigue is clearer. After all, it’s not just TV. Wedbush Securities downgraded shares of

Peloton Interactive

(PTON) this past week, citing the reopening of gyms and a growing menu of competing services. Growth will shift to normal levels from frantic ones, it predicts. The shares are well off their high, but Peloton still trades at an ambitious six times projected revenue for the coming four quarters.

I now find myself with subscriptions on an exercise bike and rower, three music-streaming services, and a handful of newspapers and magazines—ahem, you can’t have too many of those. My dog has a subscription for batteries for her invisible-fence collar. My kids are members at a local bouncy playhouse. It’s starting to feel like a gradual monthly burglary, only the security service I subscribe to doesn’t have an alarm for it.

What’s next, subscription underpants and membership beef jerky? Never mind: I just noticed there’s something called MeUndies at $14 a month, and Jerky Snob for $15 and up.


has developed a machine-learning model that it says can identify stocks headed for big dividend increases and market outperformance. I’m hard at work on a machine-blaming protocol in case the UBS robo-picks flop.

The good news is that earnings are bouncing back smartly, balance sheets look strong, and payout ratios—dividends as a percentage of earnings—are low, so UBS expects S&P 500 dividend payments to expand by 30% over the next two years. The index looks pricey at 23 times this year’s earnings forecast, but not as pricey as, say, junk bonds, which recently yielded less than the inflation rate.

The magic recipe for predicting dividend growth is known only to the robots and their handlers. But the raw ingredients include current yield, recent payment growth, payout ratios, and changes to earnings estimates. UBS says the stocks its model identified as the likeliest dividend growers not only tended to come through with payment increases, but they also outperformed the market by 4.5% a year in back-testing. Predicted dividend stinkers lagged behind the market by even more: 7.5% a year.

So, what do the machines like?






(MA), and

Activision Blizzard

(ATVI) for raw dividend growth. For yields of at least 2%, picks include

Morgan Stanley


United Parcel Service


Illinois Tool Works

(ITW), and

HP Inc.


If the front-testing matches the back-testing, I plan to retroactively have known it all along.

Write to Jack Hough at Follow him on Twitter and subscribe to his Barron’s Streetwise podcast.

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