Streaming companies are shifting their focus "from pure subscriber acquisition to a more nuanced attention on profitable growth."
That’s according to a new report from Antenna, a market analysis firm focused on Subscription Video On Demand (SVOD) companies.
Netflix Inc NFLX, Hulu, Paramount Global Class B PARA and Amazon.com Inc AMZN each have ad-supported versions of their streaming services.
These ad-supported tiers added more new subscribers than ever before during the last quarter of 2023, and the first of 2024 in most of the major platforms.
Currently, 38% of subscriptions are ad-supported and the category appears to be growing. The rate of people who are choosing to take ads when given the choice has grown during the first quarter of 2024.
That's against a backdrop of slowing growth that has major streaming services concerned. While growth is still present, it has slowed down for several quarters in a row with 25 million new subscribers across platforms representing a 10.2% year-over-year growth during Q1 2024, against 18.8% for 2023.
Netflix led the group in growth, adding 7.3 million or 23% of all subscribers. The lead was accomplished after the company's major crackdown on account sharing and the launch of its ad-supported tier.
In recent days, Netflix also made public several strategies aimed at growing its subscription base in an age of increasing competition and "cord-cutting."
This week, the company announced new localized productions in less explored East-Asian countries like Thailand and Indonesia, in order to capitalize on their large, young demographics and hopefully replicate the world wide success of its South Korean hit "Squid Game."
Last week, the company also announced a new multi-year partnership with President Barack Obama's production house, Higher Ground.
Of the so-called Premium SVODs, Peacock, which is owned by Comcast Corp CMCSA as the fastest growing platform of Q1, increased its subscriber base by 31.3% year-over-year.
Bundles Are Helping Slow Down Churn: The concerning slowdown of growth can also be seen by the rate of net adds for new subscribers. Net adds are calculated by subtracting the number of cancellations from the total number of new subscribers, or gross adds.
Q1 2024 had the smallest amount of net adds in over two years. Across all platforms reviewed by Antenna, there were 55.2 million new subscriptions, against 50.4 million cancellations, resulting in only 4.8 million net adds. This level of cancellations was also the largest seen by the firm since it began analyzing the market.
Bundles are presenting themselves as a viable strategy for retaining clients, according to Antenna.
A bundle between Walt Disney Co‘s DIS Disney+ and Warner Bros Discovery Inc WBD was announced last month, offering Disney+, Hulu, and Max among other services.
As a comeback, Comcast came up with a bundle to include Netflix and Apple TV along with Peacock.
Clients who had taken part in Disney’s or Apple Inc‘s AAPL bundles were less likely to cancel their service than those paying for a stand-alone service.
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© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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