Research: 109.4M U.S. Households Have Streaming Services, FAST Continues Gains as Peacock Leads the Way
Kantar’s Entertainment on Demand panel revealed that the proportion of U.S. households who have a video subscription has increased to 85% for the fourth quarter of 2021. After two consecutive quarters of decline, this is up 2% points QoQ and up 2% points YoY. As of December 2021, there are currently 109.4 million U.S. households with subscriptions.
Stacking also continues to grow among streamers, as 9% of American households accessed a new service in Q4 2021, which is up 1% from Q3. Present-day, the average household uses an average of 4.7 streaming services.
Where is the majority of video streaming QoQ penetration growth coming from? FAST and AVoD tiers.
FAST is growing 4.9% points, and AVoD is shooting up 3.6% points. SVoD is only growing 1.8% points QoQ, however, for the third quarter in a row, Amazon Prime Video is the number one destination for SVoD subscribers.
Along with Amazon, other streaming services such as Paramount+, Peacock, and Apple TV+ have seen significant growth. Paramount+ has gained a share of new users, which is now at 8%. In retrospect, Netflix’s subscriber base is below two-thirds of U.S. subscribers, and penetration remains shrinking QoQ by 0.5% points, which is a decline of 5% points YoY.
In the next quarter, we can expect to see more fluctuation of subscribers as stacking continues and a significant increase in planned cancellation due to subscribers moving to free ad-supported TV services.
FAST is the Top Driver for Growth of Streaming
Research shows that about 18% of U.S. households use a FAST service as of December 2021. This has more than doubled YoY when household penetration was just 8% in Q4 2020. In quarter three of last year alone, FAST penetration spiked 4.9% points, classifying it as the fastest-growing streaming tier.
FAST gains in popularity are mainly due to the ease of use, price, amount of original content, and quality of shows. However, consumers are expecting a wider variety of content, as signing up for specific content now only accounts for 13% of new sign-ups, down from 20% in the same quarter of 2020.
Now that the Roku Channel and other free ad-supported streaming services are producing their own original content, this quality of shows is driving subscription sign-ups as viewers look for new and better things without taking out their wallets. Even better, 25% of Roku subscribers report being satisfied with the amount of original content, which is the highest of any FAST platform. 19% of Roku users are satisfied with the number of new release films.
As content moves to the forefront of FAST, it has been the only tier to see an improvement of NPS in Q4 ’21 and the only tier not to see a rise in planned cancellations going into the first quarter. All in all, ad-based platforms will continue to benefit from sign-ups, potentially driving churn of paid competitors.
Peacock is #2 For New Q4 Sign-Ups
In total, NBC Universal’s streaming service is in second place overall for new sign-ups in quarter four. According to research published by Kantar, it accounted for 10% of all new U.S. sign-ups, leading its household penetration to 12%, which is an increase of 9% compared to quarter three.
The platform is extremely reliant on its ad-based tiers to bring in new users, with 56% of new viewers using the free plan. Meanwhile, 26% of new users subscribed to AVoD, and 15% subscribed to SVoD.
Thus, Peacock is finding success in bringing in new users through FAST then having them take the next step to its AVoD or SVoD tiers. Peacock SVoD saw the most significant improvement in planned cancellation in the next three months, with only 5.5% of SVoD subscribers planning on canceling in the next quarter, whereas in Q3 2021, the percentage was 13.2%.
In particular, it is mainly specific content that is bringing in these new subscribers, especially last year’s release of “Halloween Kills,” “Yellowstone,” as well as ultimate fan-favorite “The Office.” So it’s likely that featured ads from Peacock use these titles to draw in subscribers, then keep them engaged with new content.
Live Streaming Sports Content is Not a Growing Driver of Sign-Ups
In Q4 2021, only a couple of platforms catered to live stream sports, more specifically exclusivity with certain sports and leagues such as ESPN+ offering four concurrent streams for PGA Tour’s American Express Tournament last week.
Live TV continues to be the place for sports content, which means it is not going to be the main driver for subscriber growth for streaming platforms. However, sports are still an important factor in engagement. Among users who plan to cancel any of their subscriptions in the next quarter, 9% of them claim that the main reason is that there aren’t enough sports events or matches on the service.
The Potential Downfall of Streaming Platforms: Future Churn
The average planned cancellation is up in Q4 ’21 compared to Q3 ’21. Most significantly, it is up for streaming services that rely on a single title to bring in new viewers. Q1 2022 will be a period of higher planned cancellation due to “being reliant on a single title to drive engagement,” according to researchers.
19% of Apple TV+ users plan to cancel their subscription later in the quarter since “Ted Lasso” was the main reason for them signing up. HBO Max had its most sign-ups with “Dune,” and will also experience a planned cancellation rate of 7%.
If these paid platforms want to keep engagement, they need to provide differentiating content and other forms of value such as an appealing experience and satisfying TV interface. These three things will be very important in reducing churn.
It also may be time for a multi-tiered strategy as services like Peacock tempt viewers with a FAST tier then keep them entertained with an ad-free tier.