The Premium SVOD market continued its growth march in Q1 2021, with total Subscriptions up 24% year-over-year, and up 6% from last quarter.
The category has experienced a staggering amount of disruption in the 18 months since Disney+’s launch. Last quarter welcomed Discovery+ and Paramount+. Now that all of the known premium services are in-market, it is a good moment to take stock on how the category has changed.
For starters, the players have changed. Or put another way — the ANTENNA Market Share bars in Figure 2 are getting a heck of a lot more colorful!
Two years ago, Netflix and Hulu accounted for over 3 out of every 4 Premium SVOD Subscriptions. But in the past two years, they have grown just 8%, and so now account for 1 out of 2 Subscriptions.
The four other Premium SVOD services that were in-market two years ago — HBO Now (now HBO Max), Showtime, Starz and CBS All Access (now Paramount+) — still make up about 1 of 4 Premium SVOD Subscriptions. But to maintain that share level in the face of new competition, they have grown 100% in the past two years, and so now operate at much more substantial scale.
Of course, a major change has been the new services that have launched. Disney+, Discovery+, Peacock, and Apple TV+ now account for 22% of all Subscriptions. Disney+ alone has accounted for 44% of all category growth since Q1 2019.
How are consumers managing this more complex — and potentially more expensive — set of choices? For one thing, they are cancelling their traditional linear pay TV packages at record numbers.
But they are also becoming less loyal to their SVOD services — with one exception: Netflix.
In Figure 3, we observe an increase in average monthly Churn for Premium SVOD services (excluding Netflix & Hulu) — from 5.3% to 7.0% in the past two years.
Hulu’s Churn doubled over the same time period. While a variety of factors are likely impacting their churn — including aggressive promotional pricing offers, their Live TV vMVPD product, and participation in the Disney bundle — certainly competition plays a role.
Netflix, on the other hand, saw Churn increase only 0.1% from Q1 2019 to 2021. Furthermore, they lead the industry in ‘Resubscribe Rate,’ meaning that when they do lose a customer, they are more likely than competitors to win them back.
It is an awful lot of change in eight quarters. Even more exciting — and daunting — is to envision what the market will look like at the end of Q1 2023, as the recent entrants gain their footing, and the players settle into new strategies around programming, pricing, bundling and distribution.