Netflix a winner amid SVOD industry challenges – ScreenThink


ScreenThink, MTM’s market intelligence insights tool for the TV and video industry, has announced the findings of its latest research report which paints a picture of a changing landscape for SVOD (Subscription Video on Demand) services in the UK, in the wake of multiple updates from the leading brands.

ScreenThink survey

In a climate where some SVOD services are experiencing user decline, Netflix stands out as a success story within MTM’s research.

By implementing stricter enforcement of password sharing rules in May 2023, the research has revealed that Netflix has managed to achieve a 10% increase in paying subscribers (from 60% to 70% of total users).

It’s important to note, however, that despite this success, and boasting nearly 8000 pieces of content, 60% of Netflix users also reported experiencing content fatigue, suggesting even a vast library can’t entirely prevent churn.

Content fatigue could explain another finding from the research which highlights that the younger demographics of 16-34 year olds are turning away from SVOD as their first choice for entertainment.

The research found a 13% drop in those looking to SVOD services first when looking for something to watch compared to Q2 2022, and instead are increasingly opting for live TV or BVOD (Broadcast Video on Demand) options.

Subscription cycling or ‘toggling’ still remains a key consideration for SVOD companies. A growing number of viewers (12.5%) are comfortable subscribing to and unsubscribing from SVOD services on a short-term basis, treating them more like a utility than a long-term commitment.

This highlights a desire for greater flexibility and control over entertainment spending.

Apple TV+ finds itself caught in the crosshairs of these trends. While its reputation for high-quality content remains strong, the limited library size, with less than 500 titles, appears to be fuelling subscription cycling behaviour.

Viewers are attracted by the prestige originals but churn quickly after consuming the available content, with 26% of users and lapsed users reporting they had subscription-cycled Apple TV+ in the last six months.

This churn is further highlighted by the fact that 34% of current users say they are very likely to cancel their subscription in the next six months.

However, the research also found that 8% of viewers intend to sign up for Apple TV+ in the next six months, highlighting the subscription cycling nature of the service

Philippe Epailly, Head of Quant and MTM ScreenThink, said: “ScreenThink’s research unveils a pivotal moment for the SVOD industry.

“While established players like Netflix can find success through stricter account management, with viewers increasingly cost-conscious and open to alternatives, platforms need to demonstrate clear value beyond simply offering a large content library.

“Focus on user experience, content curation, and innovative pricing models will be crucial for success.

“The introduction of ad-supported tiers by Disney+ and the recent  launch by Prime Video represents a potential solution for cost-conscious viewers.

“The initial success of Disney+’s premium tier also indicates viewers are willing to pay for an ad-free experience. However, striking the right balance between ad load and user experience will be crucial.”