Kantar’s Worldpanel latest Entertainment on Demand (EoD) data on the Australian video streaming market uncovered the following behaviours within the Video on Demand (VoD) market between April and June (Q2) 2024:
- Video-on-Demand (VoD) services are facing growing consumer discontent, with the average Net Promoter Score (NPS) for the category decreasing for the second consecutive quarter to just 16 points. This widespread disaffection is reflected in falling NPS for nine of the top ten providers.
- Customer disgruntlement has been caused by a combination of dwindling net satisfaction with the amount of original content on offer and perceived poor value for money off the back of price hikes.
- To offset rising costs, consumers are increasingly turning to Advertising-based Video on Demand (AVoD) options. Over 1 in 4 new subscriptions taken out in Q2 2024 were ad-supported, compared to just 5% last year.
- The VoD market remained flat quarter-on-quarter, with 7.8 million Australian households subscribing to at least one VoD service in Q2. Despite this, Kayo (+11%), Prime Video (+4%) and Paramount+ (+3%) have seen notable subscriber growth.
- Prime Video and Stan enjoy the joint largest shares of new subscriptions for Q2, followed by Paramount+ in third, boosted by the launch of its new AVoD plan.
- Netflix’s alternative regency romance Bridgerton emerged as the most popular and watched title of the quarter.
AVoD: Balancing optimal pricing with ad relevance, for maximum impact
15% of all Australian households now subscribe to an AVoD plan, up from 9% a year ago, with the percentage having increased for the last four quarters. AVoD subscribers tend to be a happier bunch, with both Binge and Paramount AVoD customers more likely to recommend compared to those paying a premium for an ad-free experience.
Whilst NPS among Netflix ad-tier customers is slightly below that of ad-free users, it has bucked the trend and increased quarter-on-quarter. At a time when consumers are feeling the pinch, crucially Netflix’s $7.99/month standard with ads plan commands a far higher net satisfaction on value for money at 31ppts, compared to ad-free subscribers (who now pay a minimum of $18.99/month) at just 19ppts, down -5ppts year-on-year. Of the three AVoD players in Australia, Netflix scores the highest on happiness with the number of ad breaks per show, whilst Binge customers rate the relevance and enjoyment of the ads they’ve seen on the service higher than average.
Kantar’s new attitudinal questions on advertising show AVoD streamers are also more open minded when it comes to ads. They are more likely to want to see tailored ads based on their interests and search history, and to discover new products and TV shows, whilst also having a much higher likelihood of buying new products and services they’ve seen in ads, compared to the average consumer. When it comes to ad category viewing preferences, entertainment and media is the most popular among all AVoD streamers, however Gen Z prefer to see ads for tech and consumer electronics, whilst travel and tourism is top of the list for over 55s.
Netflix’s Bridgerton captures Australian hearts and screens
The strategic decision to drop season three of Bridgerton in two parts has proven successful for Netflix, as the show takes the top spot for most viewed and enjoyed title in Q2. The romance series is set in the early 1800s London Regency era, and whilst it unsurprisingly attracts a largely female audience, it also attracts more female Gen Z and Millennials than the Netflix average, as it defies tradition by focusing on racial and gender empowerment alongside a diverse cast. Bridgerton hasn’t just been successful with long term Netflix subscribers either; it has motivated more new customers to sign up for the service than any other title.
Another Netflix original series, Baby Reindeer, was the second most viewed and enjoyed show for Q2. The dark comedy mini-series set in Edinburgh and London, pulled in more male viewers and 35-54 year-olds than Bridgerton. This follows a trend of successful Netflix originals this quarter, taking out four of the top five most enjoyed titles, with Eric and The Gentleman also featuring. And Netflix remains head and shoulders above the competition when it comes to subscriber net satisfaction, with original content at 38%, +10ppts above the category average. Prime Video’s Fallout was the third most enjoyed and viewed title, and was the one most cited for driving new subscribers to the service.
Can increased value perception drive higher Stan retention?
Stan's new subscriber growth in Q2 2024 is strong, with its share matching Amazon Prime Video at 12.1%. Free trials and bundle deals, such as the recent Uber partnership, have been key in boosting sign-ups. However, content discovery was also a key driver, with almost 1 in 4 new subscribers searching for a specific title and finding it available on Stan – additionally, nearly 40% of new sign-ups to Stan were for specific content, higher than any other streaming provider. Yellowstone was by far the biggest driver of acquisition, with customers potentially encouraged to catch up on the latest episodes before the final drop of Season 5 Part 2 in November – and before Stan scrapped its free trials towards the end of June.
However, despite above-average customer satisfaction for content quality, variety and amount of both original and local content, Stan faces challenges. With a Stan subscriber having, on average, four services, competition for viewing time is fierce and just 11% of Stan subscribers state the service to be their most important. Whilst all providers have suffered higher churn rates, Stan has one of the highest at 15% (behind Apple TV+ and Binge) with nearly half of cancellations being a money-saving exercise and a further 31% due to infrequent usage (with difficulty finding desirable content a key factor). As satisfaction with value for money drops to its lowest level to date at 17%, and a further 12.5% of current subscribers planning to cancel their service, enhancing the perception of value is crucial for retention. This could involve improving the ease of content discovery, forming more strategic partnerships, or introducing an ad-supported tier to lower the entry price of a Stan subscription.
However, it is encouraging to see that, despite scrapping free trials ahead of the 2024 Olympics, uptake of Stan Sport among households with a Stan subscription has grown from 12% a year ago to nearly 18% in Q2 2024. This is a considerable and lucrative conversion ahead of the Paris Games, when Stan Sport customers’ eyes are much more likely to be glued to swimming, athletics and boxing compared to the average VoD household.
Access the interactive data visualisation tool for more information.