Oh dear. Well, I can't say I'm terribly surprised at all by this development, but it certainly rounded out this worst week of news hell for me.
Filmstruck UK and the other international variants will be closed as well. AT&T's decision must've come as quite a surprise to everyone involved, as Filmstruck was expanding into other territories (France and Spain in June of this year) + having merged the WB Archive streaming into it as well.
I'm sure AT&T are 100% to blame and are looking to maximize their profit / immediate returns on their large purchase. As this + TCM were clearly labors of love by some dedicated groups (and probably a friendly executive) who didn't mind the pittance of revenue loss as long as they kept their fans happy. AT&T isn't going to give a rats-ass about TCM fans or the Filmstruck people. I doubt the sale contract had anything to protect these pet projects.
And remember, it wasn't just Criterion involved with Filmstruck - a lot of small labels (Flicker Alley, Icarus, Kino, Milestone, Zeitgeist, etc) were also invested in Filmstruck as their platform of choice (like Curzon in the UK).
Let us take a look at possibilities for Criterion to move to - as they were an early adopter of streaming, and have a large catalog that will interest some potential partner.
Sony - This would make sense in theory, but Sony just has their "Sony Crackle" - which is essentially a really shitty ad supported version of Hulu. I can't see Criterion on this service at all.
Any other studio's dedicated service - Same issues as Sony + would be less promoted and more diluted by studio fluff content. Though Criterion had their
Godzilla films stream on Starz before making their way to Filmstruck .. and Studio Canal had movies on Filmstruck. Interesting.
Apple - Criterion already sells their films through Itunes, but censorship is going to put an end to any potential deal.
Kanopy - Criterion already partners with them for streaming, but only for libraries / educational institutions, so its far too limited for them to expand any further.
Hulu - I doubt the two left on the best terms, and Hulu always seems like its on life support, and the corporate interests (Disney, primarily I think) are probably just waiting to break it up and split the offerings for their dedicated sites. Hulu wasn't ever a very good fit anyway. Almost nobody went to Hulu for film, thus Hulu never promoted Criterion (other than a tab on the movie drop-down list).
Mubi / Fandor / etc - Does anyone still / ever use these?
Own Service - I can't imagine them going this route, with all of the costs and infrastructure that would be necessary. Plus it would just be a money loser for everyone. I know Vinegar Syndome has their streaming service, but its such a flooded market, and I'd imagine the Filmstruck issues would be magnified tenfold in another new service. Best to just partner with an existing service, unless all of the independent labels are able to unite into one service. Though I can't shake the feeling that starting another new streaming service is like starting another new cryptocurrency.
I honestly think Amazon or Netflix are their best options at this point. Netflix would probably be the better of the two, as it would have the widest impact and reach the most people, and will probably be more likely to offer exclusive branding. Whereas Amazon would just be lost in all of those add-on packages. Either of these would be worth it just so we never have to read another think-piece complaining about not being able to watch Kurosawa anywhere.
As to the physical media supremacy question - well, of course; but Criterion's Filmstruck had 100s of films that hadn't made it to disc and likely won't.