Kantar Worldpanel’s Entertainment on Demand (EoD) data on the Australian video streaming market uncovered the following behaviours within the Video on Demand (VoD) market between October and December (Q4) 2023:
- The number of Australian households subscribing to at least one video streaming (VoD) service increased by 140,000 from Q3 – a rise of +2%.
- Almost three quarters of households (74%, a total of 7.4m) now have at least one VoD service, with the majority (7.1m) accessing a paid video streaming subscription service (SVoD).
- Prime Video, Paramount+, Binge, Apple TV+ and Britbox all achieved strong subscriber growth in Q4.
- Netflix, aided by the sound performance of its ad-supported tier, rebounded to post a quarter-on-quarter growth of +2% in subscribers, after successive quarterly declines.
- Advertising-based Video on Demand (AVoD) services increased again, up +100,000 households compared with Q3 to reach 1.1m.
- Prime Video, Binge and Paramount+ emerged as the leaders in attracting new subscribers during Q4, with Black Friday promotions instrumental in bumping share for the latter two players.
- Netflix’s The Crown was the top viewed title in Q4, followed by Reacher on Prime Video, which also drove 8% of new sign-ups among new Prime Video subscribers.
- Free Ad-Supported Streaming Television (FAST) is the fastest growing streaming segment, albeit from a low base, with a net increase of 300,000 households and penetration reaching 7.2% of all households.
- Aussie households also upped their usage of Broadcast Video on Demand (BVoD) services in Q4, with 4.5m now watching BVoD at least once a week; 7Plus remains the most popular channel.
Could bundling and aggregation be the solution to an increasingly crowded market?
There are now 15 VoD service providers in Australia that each have a share of more than 3% of the category, up from 13 services a year ago. Households are increasingly stacking their services, now up to an average of three per household, more than in the UK and France. With this increase in streaming options, consumers are looking to bundles and app centralisation to streamline their VoD portfolio viewing and billing. Bundling grew to 20% of all VoD subscriptions in Q4 of 2023, up from 15% a year ago, with value for money a key driver for sign-ups, higher than average and growing +5ppts year-on-year. Consumers are highly likely to bundle their new subscription because they were initially offered a free trial by the partner company, often for an extended period, ranking as the number one marketing touchpoint for bundlers and +4ppts above average.
The explosion of VoD choices for consumers has also led to an increase in those cutting a service because they’ve got too many subscriptions and can’t utilise them all, growing +2ppts quarter-on-quarter to become the third most stated reason for cancelling. Additionally, the number of customers cancelling because they found it hard to find content they wanted through the app also grew in Q4, particularly for medium to small size services (e.g. Paramount+ and AMC+).
Andrew Northedge, Consumer Insight Director, Worldpanel Division, Kantar, said: “With the increase in BVoD usage further congesting the streaming app landscape, aggregating both paid for and free services through one central access point could be the solution to these common problems streamers encounter. Aggregators such as Prime Video Channels, Apple TV and Foxtel’s upcoming Hubbl offering look well positioned to become the new go-to destination for streamers to find and watch content".
Prime Video, Binge, and Paramount+, the major winners for new subscribers in Q4
Prime Video enjoyed a halo effect of strong Prime membership growth in Q4, with subscriptions up +2ppts quarter-on-quarter to reach 33.5% of households. This was spurred by increasing retail sales and a spike in Prime Delivery usage and Prime exclusive shopping deals during the holiday season. However, Prime Video remains the most used and most important Prime service, with around 70% of new members watching content in their first month. And for those new Prime Video users, specific content was the top driver of sign-up, with Reacher the no.1 title, while value for money has dropped in importance since membership price hikes in June. Currently, the number of adverts is not a major source of dissatisfaction for Prime Video users, however with the impending automatic inclusion of in-content ads later this year it could become a major gripe and churn catalyst for many users, offsetting any incremental ad revenues.
Binge’s share of new VoD subscriptions increased again in Q4 to 11.4%, with almost half taking up the ad-supported tier, buoyed by an attractive $2/month Black Friday promotion on the basic plan. However, it was specific content available, rather than value for money, that was the primary driver for new sign-ups, over-indexing the category average by +9ppts. Older tent-pole titles such as The Last of Us, Euphoria and House of the Dragon still drew new subscribers to the service though, rather than brand new content. An increase in exposure to social media ads helped draw in more new customers for Binge in Q4, with growth of +2ppts quarter-on-quarter to 11% making it the top ‘paid-for’ touchpoint.
Paramount+ share of new subscriptions grew by +2ppts to just under 10%. Undoubtedly, this was bolstered by the attractive Black Friday deals offering 50% off annual or monthly subscriptions – around one in four new customers cited value for money as the key driver of sign-up. However, this was topped by specific content driving over one third of new sign-ups, with Paramount’s Australian soccer coverage drawing many of them to the platform, coinciding with the start of the A-League season in October. Encouragingly, planned cancellation among Paramount’s customers has declined by 5ppts to 13.5%. A much improved NPS score, off the back of higher satisfaction with a number of content-related service features, combined with above-average satisfaction with value for money can, hopefully, allow Paramount+ to reduce those planned cancellations even further.
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