TalkTalk highlights the price of its TV offer to seduce its subscribers – DR
It has been several months since audiovisual firms have explained that the churn rate of SVOD platforms is tending to increase even as recruiting new subscribers becomes more difficult, especially since Netflix warned of a sharp slowdown in recruitments in the first quarter of 2022, quarterly results to be published on April 19.
1.51 million canceled subscriptions in the first quarter
According to this recent study by Kantar, the number of British households with at least one paid subscription to an SVOD service decreased by 215,000 in the first quarter of 2022, to reach 16.9 million households (58% of households). UK households subscribe to an average of 2.4 services, making it one of the fastest growing countries in Western Europe.
In total, therefore, 1.51 million SVOD services were canceled by households this quarter, compared to 1.04 million in the fourth quarter of 2021 and 1.20 million in the first quarter of 2021.
Disturbing churn predictions
According to Kantar, more than half a million of those cancellations were put down to “saving money”, as UK inflation hit 7%. But most alarming is that nearly four in ten households (38%) plan to cancel an SVOD service primarily to “save money” this quarter, up from 29% in the previous three months. Meanwhile, streaming service penetration among Gen Z households declined for the first time, from a peak of 75.8% in Q4 2021 to 74.6% in Q1 2022.
The pace of subscriber growth is slowing, so in the three months to March 2022, only 3% of UK households took up a new subscription to a video streaming service, down from 4.2% in the first quarter 2021.
Netflix and Amazon, the essentials
Netflix and Amazon are seen as near-essential subscriptions, that is, the last to be traded off when households budget to meet rising costs. On the other hand, Disney+, NOW, Discovery+ and Britbox experienced significant churn rates this quarter compared to the previous one: Disney+ tripled its quarterly churn rate to 12% in the first three months of the year.
Source: ERA – DR
3.16 billion pounds for SVOD in 2021
Two other phenomena enrich Kantar’s economic study: first of all, the United Kingdom is the most dynamic market in Europe. Just look at the performance of SVOD at the end of 2021 to measure the gap with France, for example. Which leads some observers to say that the growth rate of SVOD can only slow down over time.
The SVOD market reached a record turnover of 3.16 billion pounds at the end of 2021, up 28% compared to 2020 which was already an atypical year. Over the quarters, Amazon Prime Video remains the service to which households subscribe the most, followed by Disney+ and Now (Sky’s SVOD service). Netflix is only in 4th position, just ahead of AppleTV+. However, Netflix remains the most popular service according to the study carried out by ERA (Entertainment Retail Association), ahead of Amazon Prime Video and Disney+.
Source: ERA – DR
Advertising to lower prices
Then, the pressure exerted by the services of AVOD and the chains FAST is reinforced. In fact, the Kantar study reveals that Netflix subscribers’ attitude towards advertising is “softening up”, with 44% now saying they don’t mind seeing ads on streaming services if it makes them cheaper, down from 38% this time last year. And as the number of services increases and the free offers grow stronger, the temptation of “SVOD-cutting” grows stronger.
Dominic Sunnebo, Director of Global Studies at Kantar, said: “With many streaming services experiencing significant revenue growth at the height of COVID, this is a sobering moment. These results suggest that UK households are now proactively looking for ways to save, and the market of SVOD is already seeing the effects” and adds: “Therefore, it is more critical than ever for SVOD providers to demonstrate to consumers that their services are indispensable in homes, in a market that has become highly competitive. New marketing and content acquisition strategies will likely need to be deployed to support this and avoid further disaffection.”
Towards new offers….
As Kantar explains, new offers are emerging, which combine both access to very broad offers in terms of content and attractive price positioning that takes into account the purchasing power of households. What is happening in the UK will spread to the rest of the continent in the coming months, it seems inevitable. The transformation of the streaming market is therefore far from over.