Kantar’s Worldpanel latest Entertainment on Demand (EoD) data on the US streaming market uncovers the following behaviours and findings within the Video on Demand (VoD) market between July to September 2024:
- Video streaming in the US is nearly universal. It now reaches 96% of, or 125M, US households. This dominance is causing some stagnation, growing only 0.2% quarter-on-quarter.
- US viewers are reaching their stacking (the average number of video streaming services accessed per household) capacity. US households now subscribe to 4.1 paid services on average, up +0.7% quarter over quarter.
- Certain streamers are pulling ahead. Pluto TV, Peacock, and Paramount+ saw the greatest absolute growth in number of subscribers over the quarter.
- The decline of paid, ad-free streaming (SVoD) has accelerated. The category shrank by 2% since last quarter.
- Quality content is no longer enough to drive growth. The top 3 titles enjoyed by consumers in Q3’24 include House of the Dragon (available on Max), followed by The Boys (available on Prime Video), and The Bear (Hulu). Yet despite their popularity, the services these titles belonged to saw no significant growth in net subscribers.
Paid video streaming in US approaches its ceiling
The VoD market grew by just 0.2% in Q3’24. Within VoD, paid ad-free streaming (known as SVoD) shrank in the quarter, losing a net 1.6 million subscribers. This is an acceleration of the net loss of half a million SVoD subscribers in Q2’24.
VoD appears to be reaching its ceiling for spend. Until now, streamers have shown a willingness to pay for additional streaming services, and the average number of services accessed per household, referred to as “stacking”, has consistently grown. In Q3’24, Kantar found that stacking of paid streaming has slowed, growing less than 1% in the quarter. This is unusual for the period of time known for television premieres.
Top titles are still the #1 driver of streaming acquisition, but in Q3’24 trending titles are no longer enough to drive growth of streaming services. This quarter, the top three titles reported as most enjoyed in Q3’24 were House of the Dragon on Max, The Boys on Prime Video, and The Bear on Hulu. All three top titles belonged to services that saw no significant growth in net subscribers.
There are still exceptions as Peacock and Paramount+ proved in Q3’24. Peacock’s exclusive rights to the Olympics helped drive growth of its subscribers by +3%. Similarly, Tulsa King helped Paramount+ grow by 3% in the quarter.
These shifts mark a change in consumer behaviour. As the US has reached its video streaming ceiling, it is no longer enough to rely on trending titles to drive growth. Streaming services may need to adjust their ambitious targets for specific titles, instead using titles as a retention tool. Sports and live events now account for 1 in 10 new SVoD subscriptions.
Ad-supported streaming drives growth and value
The streaming industry is shifting from growth through subscribers to growth through ad sales. In Q3’24, ad-supported streaming beat the total video streaming market. While total streaming household penetration was flat in Q3’24, AVoD and free ad-supported (known as FAST) grew by 1% and 2% respectively.
In Q3’24, the AVoD offerings of Disney+, Max, Paramount+, Netflix, and Peacock all grew by greater than 5%. During that same time, their SVoD subscribership declined.
Free trials and value for money were both growing influences of acquisition of AVoD in Q3’24, further highlighting the ceiling of spend paid streaming may have finally reached.
Beyond acquisition, streamers are trading down from their paid ad-free subscriptions to paid ad-supported. 15% of SVoD subscribers in June 2024 traded down to AVoD by September 2024. Peacock and discovery+ had the highest rates of trade down.
Trading down from ad-free to ad-supported represents an opportunity for additional ad revenue for streaming services. From the customer perspective, Kantar found that in Q3’24, only 16% of video streamers are happy with the relevance of ads shown to them. Marketers will need to develop context expertise, prioritise quality creative, and experiment with innovative ad formats. The ad space will become more competitive as streaming services look to show relevant ads to their subscribers to drive retention and engagement.
Hannah Avery, Consumer Insights Director, Worldpanel Division, Kantar, said:
“The push for growth and profitability of streaming is moving away from the reliance on original titles. Titles are becoming more of a retention tool rather than an acquisition tool at a point where the streaming space is saturated. Investment in original content is still critical, but net growth can no longer be expected from trending titles alone. Expect streaming services to focus on growth through their ad-supported services and expect an increasingly competitive ad sales marketplace.”
