US streaming services must focus on value to retain subscribers
Thursday, January 25th, 2024US Streaming Services must focus on value to retain subscribers as the market nears saturation point
- Entertainment On Demand Q4 2023 Us Barometer
NEW YORK — Kantar, the world’s leading marketing data and analytics company, today releases its latest Entertainment on Demand (EoD) data and insight on the US streaming market. According to the study, 95% of American households (123M) hold at least one streaming subscription, indicating near total market saturation in the country. The data shows that customers point to ‘value for money’ as the most important factor for signing-up to a new video streaming service. For the first time the eagerness to watch a specific title is not the most important factor to acquire new viewers.
Key takeaways from Kantar’s Entertainment on Demand (EoD) study, from October to December 2023, include:
- Over half of US households now use a Free Ad-Supported Streaming Television (FAST) service in the average week. FAST continues to be the fastest growing streaming type.
- Growth of both FAST and AVoD slowed in Q4’23 – despite Cyber Monday deals.
- Apple TV+, ESPN+, and Prime Video saw the greatest absolute growth in subscriber share among paid VoD competitors – aided by promotions, trials, and holiday spending.
- The end of the writers’ and actors’ strikes improved customer’s perception about content quality.
- New content and variety drove a greater share of sign-ups in Q4 compared to Q3.
Yellowstone on Peacock was the most-watched SVoD title in the last quarter, followed by Netflix’s Virgin River and Loki on Disney+. - Netflix continues to be the #1 go-to streaming service for content discovery, but Hulu and Max gained market share, rising to #3 and #4, respectively.
Streaming looks beyond top titles to drive retention
With 95% of US households already subscribing to at least one service, streaming platforms are finding it harder to win new users. Streaming services can no longer compete on only the latest title releases; they must look for ways to add value to their offering to retain their subscriber base and prevent churn.
A preferred strategy to keep users engaged in the wake of recent price hikes is offering the option of creating multiple profiles within the same account to drive value for customers. In fact, engaging multiple household members by enabling them to have their own profile increased paid subscriptions by 13% vs the previous quarter.
Diversifying content is another way to provide additional value. Services like Prime Video, Peacock, and now Max offer live content such as news and sports. Subscribers are now more satisfied with sports and live news offerings (over the last six months), but less satisfied with the variety of original content and TV series. Sports helped drive the growth of both Prime Video and ESPN+, which saw the largest jump in paid streaming market share in Q4’23. With the Summer Olympics later this year, we will likely continue seeing an increased interest in sports in 2024.
Brand ecosystems provide a strong link to streaming services
Brand ecosystems are also providing convenience and value to streamers. The ability to subscribe to another service as a channel add-on provides the convenience of saving the time it takes to switch between services. Channel add-ons, such as Paramount+ on Apple TV+ or Max on Prime Video, now account for 23% of all streaming services, up from 20% in Q3’23. Apple TV+ has benefitted from this growth. The share of video streaming services accessed as a channel on Apple TV+ has risen 45% in the last six months.
Brand ecosystems go beyond streaming channels. Prime Video benefitted from Prime Shipping in the Amazon ecosystem in Q4’23 with Prime Day in October, Cyber Monday in November, and holiday shopping in December. Apple TV+ benefitted from iPhone sales in the Apple ecosystem in Q4’23. There is evidence that linking a streaming service to a wider ecosystem is beneficial to the streaming service’s brand health.
When asked to rank their streaming subscriptions from the most to least important, the proportion of Prime Video and Apple TV+ subscribers who ranked each service as their #1 most important subscription in their streaming repertoire grew to their highest recorded levels in Q4’23. 1 in 3 Prime Video subscribers say Prime Video is their #1 most important service, and 1 in 4 Apple TV+ subscribers rank Apple TV+ as their most important service.
Hannah Avery, Consumer Insights Director, Worldpanel Division, Kantar, said: “Subscriber perception of both importance and value are key indicators of future churn and retention. Brands must dive deep into subscriber data to unveil the true meaning of these concepts and inform strategic changes that improve retention. Value and importance are dynamic, so brands must grasp how streamers interact with and perceive their offerings – it’s imperative for futureproofing amid streaming wars. This means understanding factors like content library depth, personalization features, and user experience fluidity, and informing future steps like diversifying content, optimizing algorithms, and offering flexible subscription tiers.”
Links: Kantar
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