Deloitte's recent report, ‘Deloitte's Media and Entertainment Consumer Insights 2023’, unveils a noteworthy trend in the Australian digital entertainment landscape.
The data signals a plateau in the growth of subscription video-on-demand (SVOD) services within households, pointing towards a static trajectory despite past year-on-year expansions.
This shift is attributed to factors such as budget constraints, increased subscription tiering and the rise of ad-supported platforms.
Stagnant subscriptions with a twist
The report indicates that while the number of SVOD subscriptions is plateauing, there is a slight uptick in the average number of subscriptions per household, rising from 3.1 to 3.2. This paradox is explained by the growing popularity of SVOD services, even though the average monthly spending on these subscriptions has decreased from $62 to $57 in 2023.
Factors influencing this decline include the rising cost of living, the appeal of ad-supported subscriptions and the availability of free content.
Consumer behaviour amidst budget constraints
Despite reduced spending, 34% of participants in the study reported exceeding their target monthly budget. Millennials, in particular, have made the most significant cuts to their subscriptions, with 45% surpassing their monthly entertainment budget. The report attributes this to the impact of the rising cost of living and a burgeoning array of entertainment choices, from video streaming and music to gaming and reading.
Rise of ad-supported video on demand (AVOD)
A significant shift noted in the media landscape is the increasing popularity of ad-supported video-on-demand (AVOD) services. Deloitte's findings suggest that this trend is reshaping the balance between paid and unpaid content.
The introduction of Netflix's AVOD offering in early 2023 led to 6% of customers downgrading their subscriptions, with 13% intending to cancel them altogether. Consumers are also expressing interest in aggregation, with nearly a third considering subscribing to a provider's AVOD service if it proves more affordable than their full-priced SVOD service.
Challenges and solutions in an evolving landscape
The study underlines the challenges consumers face in navigating the diverse content offerings of various streaming services. Almost half of the respondents find it difficult to determine which content is available on different platforms. In response to these challenges, the report notes the emergence of various models, with some providers consolidating subscription management and others building content ecosystems across different media types.
Government intervention and the future of streaming
Deloitte's report aligns with the ongoing debate surrounding the Australian Government's proposed changes to content viewing. As the Federal Labor Government considers prioritising free-to-air TV platforms over local streaming services, the report contends that Australians are increasingly inclined toward streaming services, including SVOD, music, video gaming, pay TV and news subscriptions. The average number of subscriptions per household has seen a slight increase, reaching 3.2 in 2023.
Deloitte's comprehensive insights shed light on the evolving dynamics of the subscription-based entertainment industry in Australia. The plateau in SVOD subscriptions, coupled with shifting consumer behaviours influenced by budget constraints and the rise of ad-supported content, indicates a crossroads for the future of entertainment subscriptions in Australian households.
As the industry navigates these changes, providers are exploring innovative solutions to address cost, complexity and user experience issues in a bid to keep audiences engaged with the content they love.
Paul Budde is an Independent Australia columnist and managing director of Paul Budde Consulting, an independent telecommunications research and consultancy organisation. You can follow Paul on Twitter @PaulBudde.
This work is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia License
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