The high cost of living is taking a toll on the way we consume home video streaming services, writes Paul Budde.
KANTAR’S LATEST Entertainment on Demand data on the Australian streaming market reveals that between July to September 2022, the number of Video on Demand (VoD)-enabled households that subscribed to at least one video streaming service fell by nearly 180,000, with over one million services cancelled.
Furthermore, this third quarter of 2022 saw the largest drop in subscriptions coming from young adults aged 25-34 years old. It is expected that this declining trend is set to continue during 2023.
Overall, 6.15 million Australian households still subscribe to at least one of the Subscription Video on Demand (SVoD) services that are on offer, however, this is nearly 180,000 households less than in the previous quarter. According to the research, a further 24% of SVoD households plan to cancel a service in the next three months.
We saw the overall downward trend already starting earlier this year and there surely are close links between the current economic situation and the decline. Households that are under pressure will have to start looking at saving money and entertainment is an easy target.
It is therefore no wonder that subscriptions suffer their sharpest decline among households with under 25 years of age and school-age families. This doesn’t mean that those who cancelled don’t use any SVoD service anymore. The majority of households do subscribe to two or more services, so most people will be rationalising their subscriptions rather than getting out of these entertainment services altogether.
On the other hand, nearly 5% of households signed up to a new video streaming service in this quarter, amounting to 470,000 households. However, this was not enough to stop the decline; there are more people cancelling their service than there are new people taking up new subscriptions.
To counteract the decline, Netflix already foreshadowed the introduction of an advertising-based service. This week, Netflix starts a U.S.$6.99 (AU$11) advertising-supported subscription called “Basic with Ads”, where people opting for a lower-cost option will be shown four to five minutes of ads per hour of content they watch.
There is also a trend of customers “gaming the market” by using the free trial subscription services or other promotions on offer, often hopping from one service to another.
New subscribers are increasingly drawn to Amazon Prime Video, with this provider accounting for around 25% of new services taken out this quarter. Stan and Apple TV+ are the other players who are also able to attract significant numbers of new subscribers. The free trial service is proving to be a successful formula to attract new users to their services. However, it is not always clear if and how these free trial service subscriptions are reflected in the statistics.
Of the 44% of customers who took out a new service with Binge for specific content, nearly half signed up to watch House of the Dragon. After Disney+, Binge carries the second highest rate of purchase intent among those households looking to take out a new subscription in the next three months at 11%.
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.
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