Both new sign-ups and cancellations rise in the Australian streaming market

Switching providers becomes more prevalent in the video on demand industry, as do free trials and ad-supported plans.
01 August 2023
Au EoD Q2 2023 IMAGE

Strategic Insight Director, Australia

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Worldpanel’s latest Entertainment on Demand (EoD) data on the Australian streaming market uncovered the following behaviours within the Video on Demand (VoD) market in the second quarter of 2023:

  • VoD-enabled households that have access to at least one video streaming service in Australia increased to 6.24 million, up 114k, quarter-on-quarter, representing 62.6% of households.
  • 1.62 million new VoD subscriptions were taken out between April and June 2023, an increase of 280k on the previous three-month period. 5% of new VoD services were Advertising-based Video on Demand (AVoD) this quarter, up from 3% in Q1’23, as consumers look to lower-priced plans to find value, alongside an increase in those taking advantage of free trials.
  • Apple TV+, Paramount+, Stan and Britbox all enjoy quarter-on-quarter increases in share of new subscriptions.
  • Between April and June, 2023 there were 1.25 million cancellations of VoD services, up 100k on the previous three-month period, as consumers increasingly switch in and out of services
  • Cost-cutting was once again the underlying factor pushing most to cancel in an economic climate that remains tough for many.
  • Netflix endured the most significant net loss in users across Q2’23 after introducing password-sharing restrictions and additional account member fees to Australia in late May.

Netflix suffer a drop in advocacy and loss in viewers, as account sharing restrictions kick in

Netflix’s subscriptions declined in Q2 due to the implementation of account-sharing restrictions. Although Netflix’s Net Promoter Score (NPS) rating remains relatively high at 28 percentage points, it dropped from 32 percentage points in the last quarter. This drop in satisfaction is attributed to several factors, including the limitation on multiple users accessing the service, due to the introduction of a password-sharing ban. Net satisfaction declined from 12% to 6%, now below the category average. Additionally, satisfaction with value for money, whilst in line with the market, has also slipped quarter-on-quarter, despite an increase in subscribers on the low-cost Basic with Ads plan.

Netflix’s churn rate has doubled to 6%, with planned cancellations in the next three months also increasing to 8%. For those cancelling Netflix subscriptions, 42% cited a desire to save money. Additionally, 30% cancelled due to the new password-sharing restrictions and an unwillingness to pay for additional members outside the household. It remains to be seen whether those lost users will eventually return and pay for the extra household member access or if they’ll continue not to see value in Netflix’s new sharing fees.

Ted Lasso and Partner Promotions behind strong quarter for Apple TV+

Apple TV+’s user base grew 16% compared to the previous quarter, primarily due to an increase in new subscriptions in Q2’23 coinciding with several partner promotions offering extended free trials. New Smart TV purchases, which now often include extended free VoD service trials, have also driven sign-ups in the overall market and among new Apple TV+ subscribers, who prefer this option more than major providers.

Moreover, among new Apple customers, the offer of a free trial as a touchpoint reached 35%, resulting in almost two-thirds of new Apple TV+ subscribers signing up in Q2'23 without fees. This has influenced the value for money factor, which became a more significant driver of purchases, accounting for almost 1 in 5 new sign-ups.

Nevertheless, despite the promotional offers, the content itself remains the most significant driver for sign-ups, with Ted Lasso being the standout program leading Apple’s growth. Following its big win at the 2022 Emmys, the release of the 3rd season in March 2023 propelled Ted Lasso to become the most enjoyed and viewed title across all Australian VoD streamers in Q2’23.

Binge with ads launch receives mixed reaction from customers

The forced introduction of ads for Binge users on their basic plan in late March coincided with churn rates increasing 3 percentage points to 15% for the three months ending June 2023. Although on the other side, overall user numbers still improved quarter-on-quarter, as new adds, 1 in 4 of which were on the ad-supported tier, eclipsed churn volume. This suggests that the intro of ads in exchange for being ‘gifted’ HD content has somewhat paid off for Binge so far, with the share of total VoD viewership peaking to a yearly high this quarter and Succession ranking as the second most enjoyed title for VoD streamers in Q2’23.

But with planned cancellation rates increasing for Binge this quarter, alongside slipping advocacy and growing dissatisfaction with the number of Ads users must watch, it’s too early to tell if the AVoD launch will be a success long-term.

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