Research: US streamers leaving VoD
November 4, 2021
The US SVoD market continues to expand and transform, according to research from Kantar.
Entertainment on Demand, the solution measuring streaming service subscription levels, reveals the following subscriber behaviours in the US for the third quarter of 2021:
- The proportion of US households that have a video subscription has dropped to 85 per cent (down 1 per cent QoQ, and up 2 per cent YoY), meaning there are now 109 million households with subscriptions, as of September 2021.
- Video streaming QoQ penetration decline is driven by SVoD which declined 1.5 per cent.
- Video streaming sheds off solus service subscribers/users; 85 per cent of penetration losses in Q3 2021 are those who accessed just 1 video streaming service in the previous quarter.
- Amazon Prime Video is the #1 destination for new subscribers for the second consecutive quarter, but subscriber churn is higher than acquisition, resulting in overall loss of penetration of 2.4 per cent QoQ.
- Netflix subscriber base continues to sit at 2/3 of US subscribers, but penetration continues to decline QoQ by 1.8 per cent.
- Despite QoQ penetration decline, the number of households taking out/accessing new services is up as stacking continues to grow among current streamers.
- With the success of Ted Lasso (pictured), the top most enjoyed and recommended content in Q3 2021, Apple TV+ gains share of new SVoD subscribers (now at 7 per cent of new subscriptions) and NPS is up 18 points.
- Within FAST (Free Ad-Supported TV), ‘price’ and ‘ease of use’ break down barriers for sign up, but as high stacking and content wars continue, there is risk of disuse and churn among free services.
- Q4 can expect to see more retention of subscribers, but more competition for screen time. Trending content will help determine who wins in Q4 2021.
Performance highlights across the major vendors include:
Streaming Penetration Declines
Streaming penetration is down 1 per cent pts QoQ, to 85 per cent, driven by the SVoD tier. While SVoD still remains the bulk of the streaming market at 82 per cent US Households, penetration declines by 1.5 per cent QoQ. However, FAST (Free Ad-Supported TV) and AVoD (Paid Ad-Supported Video on Demand) are growing tiers within the video streaming market; 14 per cent access FAST services (up 3 per cent pts. QoQ) and 21 per cent access AVoD (up 0.8 per cent QoQ).
Overall, 4.5 million consumers cancelled subscriptions in Q3 2021 (including those who had multiple subscriptions and remain in the streaming category). But of those 4.5 million cancelled, 85 per cent, or 3.8 million, were among consumers who had only one subscription in Q2 2021 and no subscriptions in Q3 2021.
Across platforms, Amazon Prime Video accounted for the bulk of penetration declines, losing 2 penetration points in one quarter. This comes after Amazon Prime Video accounted for the largest share of new subscription in Q2 2021, driven by Prime Day. Among the group who had one subscription in Q2 2021 and cancelled in Q3 2021, 69 per cent had an Amazon Prime Video subscription in Q2 2021.
Beyond SVoD, AVoD, and FAST Streaming, Kantar reports wins for Live Pay TV (Cable TV or MVPD+) in Q3 ’21. Households with Live Pay Only (no Streaming) are up to 10 per cent in Q3 ’21 (compared to 9 per cent Q2 ’21), driven by Cable TV. Similarly households with both Live Pay TV and Streaming are up to 51 per cent in Q3 ‘21, from 50 per cent in Q2 ’21. Meanwhile Streaming Only (AVoD, SVoD, FAST) is down 2.2 per cent.
As the bulk of Streaming penetration declines in Q3 ’21 came from ‘lighter; subscribers, Kantar says Q4 2021 can expect to see fewer losses as the category is left with more engaged streamers. In an already crowded market, pressure mounts as Cable TV is winning among the pool of potential Streaming subscribers and users.
Stacked Subscriptions Grow
Despite the decline in overall Streaming, stacking continues to grow among those still in the market. Across total Streaming, the average subscriber now has 4.2 Streaming subscriptions, up from 3.8 in Q2 2021. The more mature platforms like Netflix, Amazon Prime Video and Hulu continue to hold subscribers who are less likely to stack subscriptions, and stacking growth among these consumers is slower than the total market. For newer competitors launching into video streaming, competing with the mature platforms may be more of a challenge than competing with other maturing platforms.
Also noted in previous quarters, it is newer platforms that drive high stacking. Platforms like Apple TV+ (5.3 average subs), HBO Max (5.2), Peacock (5.3), Discovery+ (5.6), and Paramount+ (5.8) all have high stacking subscribers, the latter two being newer services that launched in Q1 2021. For high stacking subscribers, this means more competition for screen time, and greater risk of churn.
The growth in stacking, particularly for the platforms with high stacking subscribers, is in part due to the success in growth of these newer services. The ‘mature’ services (Amazon Prime Video, Hulu, and Netflix) have all lost share of subscribers in Q3 2021. Instead, the high stacking platforms have gained. Most notably platforms with AVoD and/or FAST tiers saw the greatest gains. HBO Max share has grown by 24 per cent, now accounting for 15 per cent of all subscribers; Peacock share grew by 30 per cent, accounting for 11 per cent of subscribers; and Discovery+ share grew by 68 per cent, accounting for 6 per cent of all subscribers.
This high stacking and growth of share among maturing platforms in Q3 2021 indicate that below the surface the market can shift quickly. Although we don’t anticipate huge losses for the overall VoD market in Q4 2021, the share of subscriptions may continue to change. Platforms who keep their viewers engaged with leading content will determine who wins in this high stacking market ongoing.
Threat of Churn Declines
As these newer subscriptions gained their footing in the last quarter, their NPS scores improved significantly. Total Streaming NPS rose to 44, up 4 points compared to Q2 2021. HBO Max, Showtime, Apple TV+, and Discovery+ saw the largest change in NPS, each rising double digits. Across these platforms, variety of content and interface are common cited areas of satisfaction among subscribers.
With increased satisfaction, also comes more use of each service and declines in planned cancellation. In Q3 2021 only 4.4 per cent of subscribers said they didn’t watch their subscription in the average week, down from 5.5 per cent in Q2 2021. More streaming of each service is a good indicator of greater retention and less churn in the future. This is supported with a decline in planned cancellation in the next three months.
As NPS and use go up, planned cancellation goes down. The less mature platforms still have higher than average planned cancellation, but significant improvements have been made from Q2 to Q3 2021. 4.1 per cent of all streamers say they plan to cancel a subscription in the next three months, down from 6.3 per cent in Q2 2021, a decline of 35 per cent. The less mature platforms are seeing even greater reductions in planned cancellation. For example, HBO Max planned cancellation declined by 41 per cent, and Paramount+ planned cancellation declined by 53 per cent.
As Q3 2021 saw losses for the Streaming category, Q4 2021 is expected to be a more positive story. Q2 2021 saw higher claimed planned cancellation, which was seen in the loss of lighter subscribers in Q3 2021. As the category is left with more engaged and more satisfied streamers, we wouldn’t expect to see the same declines in Q4 2021.
The Streaming landscape continues to be crowded and stacking continues to grow. Q3 2021 saw a loss of less engaged subscribers, primarily those with only one subscription in Q2 2021. As the bottom fell out, the category was left with more engaged subscribers, and as a result planned cancellation has dropped. Q4 2021 can expect to see more retention of subscribers, but more competition for screen time. Trending content will help determine who wins in Q4 2021, concludes Kantar.