Video streamers in Australia grow weary of inflated subscription prices

Advocacy and satisfaction with value for money fall among the major providers, with Disney+ experiencing the largest drop.
29 April 2024
AU EoD Q2 2024 IMAGE
Andrew Northedge

Consumer Insight Director, Worldpanel Division

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Worldpanel’s latest Entertainment on Demand (EoD) data on the Australian streaming market uncovers the following behaviours within the Video on Demand (VoD) market between January to March 2024:

  • Net satisfaction with value for money for the whole VoD category fell from 27% a year ago to 21% in Q1 2024, as every major provider enforced some form of price increase over the last 12 months.
  • Subscribers are also now more reluctant to recommend their service, with 8 out of the top 10 providers suffering a year-on-year drop in Net Promoter Score (NPS).
  • Advertising-based Video on Demand (AVoD) services are becoming a more popular option, with 16.6% of VoD households choosing a cheaper ad-supported plan, compared to just 9.2% a year ago.
  • Kayo posts an impressive performance, with its new subscription share doubling quarter-on-quarter to 10%, the joint largest along with Stan and Paramount+ which also enjoy increases.
  • After a strong festive season in Q4 of 2023, Amazon Prime Video’s share of new subscriptions falls 6ppts to 9%. Overall household penetration of Prime memberships also slips – declining 0.4ppts quarter-on-quarter to 33.1%.
  • Netflix’s Australian TV series Boy Swallows Universe takes the top spot for both most watched and most enjoyed title in Q1.
  • 7.8 million Australian households now subscribe to at least one VoD service, with penetration increasing from 74.3% in the previous quarter to 75.2% in Q1.

Streaming services in Australia must focus on creating more value for customers

The first quarter of the year for the VoD category saw many of 2023’s themes remain, as consumers fought stubbornly high interest rates by looking to trim their discretionary spending on services such as video streaming.

Average household spend on VoD has risen for the third quarter in a row, now hitting $45 a month across an average of three services. The need to save money remains the top reason for cancellation at 42% of churners, but other value related cancellation reasons have seen a large increase in Q1, such as not being willing to pay a higher price and not wanting to pay after a free trial. This has correlated with an increasing number of streamers cancelling their service, with most services experiencing a bump in churn rates in the first quarter of 2024.

This means services will need to diversify their offerings to make up for increased prices, for instance by increasing sports content, live streaming or locally produced content, all areas which have seen a slight uptick in satisfaction for Q1. Meanwhile core areas that contribute to satisfaction, such as the quality of TV shows and amount of original content, have fallen back, particularly for global services like Disney+ and Netflix, no doubt a knock-on effect of the Hollywood writers’ strike last year.

Netflix Australia’s homegrown Boy Swallows Universe enthralls local audience

Netflix’s take on Trent Dalton’s semi-biographical book Boy Swallows Universe, with an Australian cast and local production in Brisbane, has proved to be a success, holding the top spot for most viewed and enjoyed title in Q1. It has also helped Netflix improve its net satisfaction rating for local content, which is timely ahead of the government’s minimum local content quotas for streaming companies due to be introduced later this year.

Indeed, local content, and non-US content in general, has been growing in popularity among all VoD streamers – five out of the top 10 most enjoyed titles originated from outside of the US in Q1, up from four the previous quarter, while last year in Q1 the US accounted for all top 10 titles. Netflix’s new local market focus has helped to shrink churn quarter-on-quarter to just 6%, far lower than any other rival, as net adds grew and more customers watched via the ad-supported platform, which now contributes 19% of all subscribers and 24% of new adds.

AU EoD Q2 2024 graph

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Kayo kicks goals for Foxtel and Hubbl, as new subscriptions surge

After launching its ‘Get on Board’ campaign in February ahead of the start of the new NRL and AFL footy seasons, and then boosted by the release of Foxtel’s new aggregator platform Hubbl in March, Kayo enjoyed its highest ever share of new VoD subscribers (10%). Those signing up primarily for AFL (24%) just pipped NRL fans (18%), while those wanting to watch motorsport also increased this quarter, as the Australian F1 Grand Prix in March enjoyed record crowds.

The variety of sport on offer at the start of the year also proved a hit with existing Kayo customers, with retention rates rising from 84% last quarter to 88% in Q1, well above that of rivals Stan Sport (77%) and Optus Sport (81%). Foxtel’s other major service Binge, however, suffered a drop in both new subscribers and retention this quarter, with the Black Friday $2 per month for three months offer ending in February/March, causing a hangover effect as churn increased by 2ppts to 20%.

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