Australian streaming market revives in Q3

With Netflix and Disney+ poised to continue password crack down; Netflix secures top 3 most viewed and top 3 most enjoyed titles.
23 October 2023
AU EoD Q3 2022 IMAGE

Strategic Insight Director, Australia

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Worldpanel’s latest Entertainment on Demand (EoD) data on the Australian video streaming market uncovered the following behaviours within the Video on Demand (VoD) market between July and September (Q3) 2023:

  • During the third quarter of 2023 (Q3), 7.26m households held at least one VoD service, representing 73% of households and growing by +150k or 2 percentage points quarter-on-quarter.
  • Those subscribing to an Advertising-based Video on Demand (AVoD) service have risen +10% quarter-on-quarter, now reaching over 1m households.
  • Value for money is becoming increasingly important, and now a key driver for 1 in 4 new subscribers, however, top content remain the #1 factor.
  • A growing number of new subscriptions were taken out on a free trial, up from 25% in Q3’22 to 35% in Q3 ‘23.
  • Disney+, Binge, Stan/Stan Sport, Britbox and Optus Sport all enjoy quarter-on-quarter increases in share of new subscriptions.
  • Netflix shows resilience in competitive market securing both the top 3 most viewed and top 3 most enjoyed titles with Virgin River, One Piece and The Witcher.
  • Marketing campaigns and promotional activity drive surge in new subscriptions

Disney+’s enticing offer of three months for the price of one proved successful in luring both brand new and returning customers to the service, as their acquisition share for Q3 nearly doubled quarter-on-quarter to 11.6%. Many of those new subscribers discovered the Disney+ promotion through Above the Line advertising, with online, social media and TV ads all growing as touchpoints, with value for money growing as a key subscription driver. Consumers ultimately signed up for Disney+’s exclusive content catalogue, such as Marvel and Star Wars franchise titles, including the newly released Ahsoka, along with new seasons of Grey’s Anatomy and Only Murders in the Building.

Binge partnered up with both Telstra and JB Hi-Fi, to offer customers extended free trials with the aim of drawing them into the service and eventually transitioning to a paid subscription (SVoD). This has paid off in the short-term with new subscriber share up to 10.7% and the total user base continuing to grow. However, with below average Net Promoter Score (NPS) and one of the highest churn rates in the category, Binge will need to improve on areas such as original content, new release films and interface issues if they are to retain the influx of new customers this quarter.

Stan, meanwhile, took a different approach, focusing on recovering lost customers with a tempting one free month offer – an offer usually reserved for its first-time subscribers only. This mechanism appears to have worked, with the rate of acquisition more than doubling quarter-on-quarter and the offer of a free trial becoming the key touchpoint. However, churn has also increased significantly for Stan, up from 10% last quarter to 15% in Q3. With ‘wanting to save money’ by far the top reason indicated for cancellation, and growing, perhaps a similar lever could be employed to retain the 12% of users thinking about cancelling their service in the next three months.

Q3 proves a strong quarter for Australian sport streaming services

Stan Sport benefited from several major sporting events such as The Rugby World Cup, UEFA Champions League and Wimbledon landing on the service in Q3, with increased acquisition growing their user base by +13% quarter-on-quarter. Rugby Union was the sport to drive much of that growth, with 51% citing is as the most important to them when signing up, followed by soccer at just 11%.

Of all the sports services, Optus Sport experienced the largest quarter-on-quarter growth in users at +20%, off the back of their full coverage rights to the FIFA Women’s World Cup (WWC) in July. Usage intensity of Optus Sport also grew, aided by the prime-time kick offs in the WWC due to the tournament being hosted locally – a stark contrast to the late night or early morning European games that subscribers must usually contend with which, ultimately, limits engagement for Optus Sport customers with the platform.

Whilst acquisition share was down slightly quarter-on-quarter, Kayo still enjoyed a 5% increase in overall user numbers, sustained by the AFL and NRL competitions entering their finals series phase. It was indeed AFL that was the most important sport to 19% of new Kayo subscribers in Q3, higher than any other, although several other sports such as NRL, Cricket and Motorsport also featured highly, with most customers signing up for three or more sports. This is reflected in Kayo having the highest net satisfaction with the variety of sports offered at 41%, almost double the category average of 21%, backing up their claim to be Australia’s home of live sports streaming.

Crack down on password sharing set to continue across the industry, as Netflix and Disney+ report subscriber growth in Q3

After Netflix introduced password-sharing restrictions and additional account member fees to Australia last quarter, just 2.3% of users now share the subscription cost outside of their household, down from 3.5% last quarter. With overall category penetration share for Netflix slipping -1 percentage points quarter-on-quarter, this suggests Netflix’s new extra member fees have not been well received by everyone, in contrast to the ad-supported tier which has now grown to 16% of subscriptions.

With Disney+ set to announce similar new account sharing terms and fees later this year, it will be interesting to see how the move will be received by users. Currently 2.5% share the cost outside of their household, however, a further 36% admit someone else pays, higher than any other service in Australia. With a number of those users likely residing in a different household, Disney+ will be hoping they are happy to part with an additional fee to continue watching the service.

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