Study: Customers who Cancel Netflix Disproportionately Turn to Disney+, Apple TV+

The streaming world is still digesting the fact that Netflix had a net loss of 200,000 subscribers in the first quarter of this year; the first quarterly loss from the streaming behemoth in over a decade. While the streamer is looking to address concerns by cracking down on password sharing and pulling back a bit on content spending, industry analysts are working to understand who the customers are that are leaving the once churn-proof service.

While it appears that Netflix is continuing to add subscribers at a fairly consistent rate, it is the deactivations that are driving the drop in the company's subscriber numbers (and total revenue). Market research firm Antenna released a report on Thursday examining the habits of churning subscribers.

Perhaps indicating that a specific type of content — at least in relation to perceived value — was at least partially behind these customers’ moves, 8% of individuals who canceled their Netflix service in Q1 2022 ended up subscribing to Apple TV+ in the same quarter. While that might not seem like a significant number, 8% is 4x larger than the up-and-coming streamer’s total market share (minus Netflix), indicating that Apple is offering something exceedingly appealing to the subset of the streaming population that is leaving Netflix.

Similarly, Disney+ saw 15% of Netflix cancelers end up on their service, a 50% higher rate than their 10% streaming market share.

Conversely, despite Paramount+ owning nearly one-quarter (24%) of the non-Netflix streaming market, they are only picking up 17% of customers who leave the service. The Paramount streamer has a much more traditional, middle-of-the-road programming slate than either Apple TV+ or Disney+, which could indicate why it is not enjoying the same types of post-Netflix gains that the other “+” streamers are.

One of the other ways that Netflix executives have said that they are looking to increase revenue is by exploring an ad-supported, lower-priced tier. While the service has been resolutely against advertising during its first decade as a streamer, co-CEO Reed Hastings made the somewhat startling announcement last week that the service was working on plans to roll out the option in a “year or two.”

However, Antenna’s research indicates that price might not be as big of a determinant in whether customers stick with Netflix or not. In the first quarter of the year, 35% of U.S.-based customers who signed up for a streaming service went with the cheaper, ad-supported plan. That number rises dramatically when you eliminate services that do not yet offer an ad-supported option — like Apple TV+ and Disney+ (although the latter is coming). In those circumstances, 54% of new sign-ups were on ad-supported plans.

And while instinctually one would imagine that this trend would disproportionally impact Netflix, which has the highest monthly subscription rate of any major streamer, the numbers are actually exactly the same between recently canceled Netflix customers and the streaming public as a whole.

Of course, that does not completely discount the importance of price on consumers’ decisions to exit Netflix. Because the service has a minimum monthly rate that is twice as much as some of its fastest-growing competitors, it is possible that cheaper plans from other services enticed customers to turn away from Netflix while still opting for ad-free packages.

According to Antenna’s director of marketing Ernesto Arrocha, “The cohort that churned from Netflix was significantly more likely to select a plan with ads for Peacock (80% vs. 20% for ad-free). For Paramount+ & Hulu, it was roughly split evenly. HBO Max was the service that saw the greatest percentage of these users elect an ad-free plan (65%).”