Who’s really leading the VOD subscription race?

Close to one million video on demand subscriptions have been cancelled in the last year, with 234K dropped in the last quarter, as prices rise and consumers cut back. But can big budget boxsets turn streaming fortunes around? 

Despite cost of living concerns slowing growth for many subscriptions in the UK, Netflix has promisingly secured 2.41 million new subscriptions in the last three months, causing share prices to rise at the time of going to press.

But now only 56% of households have one video on demand (VOD) subscription or more, reported Kantar’s latest research this week. The findings also indicate some degree of market stabilisation after consecutive declines in subscriptions this year.

“There are a number of dynamics at play in the market, such as the cost of living crisis and subsequent ‘cord-cutting’, as well as a degree of ‘content fatigue’, experienced by some video on demand (VOD) viewers, which has resulted in an overall drop in household streaming video on demand (SVOD) penetration,” commented Dominic Sunnebo, Global Insight Director, Kantar, Worldpanel Division.

108K new signups were seen across all platforms in the last quarter, largely thanks to the release of Paramount+, which easily overtook AppleTV+ and Discovery+, in new subscriptions over the last three months.

“However, the launch of a new streaming service into the UK market has been relatively successful, suggesting that fresh content is still a key attraction for British viewers,” added Sonnebo.

“One million households have stopped streaming,” stated Sunnebo. “The most recent quarter saw two of the most anticipated releases of the year, they ranked as the top two most enjoyed pieces of subscription video-on-demand content during the period, and yet we still saw a continuation of the negative trend of the market getting smaller.”

House of the Dragon on NOW was the most enjoyed SVOD title over the quarter, followed by Lord of the Rings: The Rings of Power on Prime Video, Kantar’s data revealed. 

Although, the premiere of two of the most-hyped and expensive shows of all time – the $650m (£580m) productions of Rings of Power and House of the Dragon – failed to encourage enough new signups to counter the decline of 234K households with at least one SVOD in the last quarter.

Finally, some good news for Netflix 

Netflix’s 2.41 million new signups this quarter were celebrated last night at the close of Wall Street Trading as share prices rose 14.4%, after a drop of 60% since the beginning of the year.

Although Netflix accounted for just under one in four SVOD churners, almost half (45%) of churned Netflix subscribers dropped out of the SVOD category altogether, according to Kantar’s findings. 

So if subscribers drop SVOD platforms to help budget, Netflix is likely to be the last platform they’ll cut.

“Data indicates that viewers did not switch to a competitor, or use a secondary streaming subscription; rather, they left the SVOD market altogether, reverting back to either pay TV or linear TV,” noted Sunnebo. 

“In fact, 38% of Netflix customers only have a Netflix streaming subscription, and these ‘solo streamers’ are making up a disproportionate number of Netflix churners.”

Netflix expects 4.5 million subscriber sign ups over the coming months as they launch their ad-funded tier in an effort to drive growth.

SVOD platforms with a plus

Last quarter, Disney+ unseated Netflix in subscriber advocacy – the net promoter score – and has held onto its pole position in Q3. 

The steady increase in subscriber advocacy for Disney+ is resulting in positive movement across many other key metrics, including monthly churn in the quarter falling to an average of just 1.7%.

Disney+ is the fastest growing service major service in the Q3 2022 quarter (excluding newly-launched services like Paramount+).

Sonnebo continued: “With a major new streaming service, Paramount+, launching in the quarter, it might be expected that SVOD would see a bounce in penetration, but 95% of Paramount+ subscribers were already subscribing to one or more subscription streaming services. 

“So, whilst they contributed to the overall size of the SVOD market, the service brought in a negligible number of entirely new streaming households. Subsequently, subscription stacking slightly rose in the latest quarter, with the average VOD-enabled household subscribing to 2.5 different services, up from 2.4 the previous quarter.”