Streaming Market Evolves: Prime Video Leading in Growth, Netflix Flagging
Cord cutters across the United States are changing their ways. That’s according to a new study from Kantar, which offers fascinating insights into the US streaming market in the first quarter of 2022. For the fifth quarter in a row, Prime Video lead the way in new subscription video-on-demand (SVOD) customers, with Disney+ and Apple TV+ also making gains.
Overall, 110 million U.S. households have some kind of streaming service and growth in the market has returned after stalling in Q1. Paid streaming without ads is up 1.5%, while paid ad-supported streaming grew by 1.6%. Part of the growth is being driven by more consumers cutting the cord, as cable TV lost over 1 million subscribers in Q1 2022. After fears that inflation had flattened the U.S. streaming market in Q1, the numbers in Q2 provide encouraging signs for content providers.
Stacking, or the purchase of multiple streaming subscriptions, increased as well with streaming customers now relying on an average of five services apiece. That amount of stacking has correlated with the growth of free, ad-supported services. Customers appear to be increasingly more willing to accept ads if it means that they could afford more streaming options.
Big-name content is helping drive customers to streamers, but it also keeps the churn factor relatively high as 8% of total streaming subscriptions were canceled in Q1. Since stacking is continuing to grow, this churn appears to be driven by streamers jumping between services in order to find the best intersection of content and value.
The study also continued to show some trouble signs for Netflix. The streaming giant now reaches 61% of American households, down from 67% in Q1 of 2021. A total of 970,000 subscribers left Netflix in Q2, but it was 1.3 million in the United States and Canada. Raising the price of subscriptions made executives believe the exodus would be even greater, but content like the fourth season of “Stranger Things” helped to mitigate losses.
In order to further combat this loss, Netflix is preparing to launch an ad-supported tier of its own. That tier is projected to bring over $1 billion in revenue to for the streamer and will apparently launch in early 2023. The strategy is supported by the Kantar study, which shows that ad-supported streaming services now penetrate 26.9% of households, a number that is steadily growing.