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Streaming subscriptions grow despite surge in cancellations
By Calum Jaspan
Australians cancelled 1.25 million video-on-demand accounts between April and June, up 100,000 on the previous quarter, but the streaming sector maintained net growth, with 1.6 million new subscriptions taken out in the same period.
The data comes from insights firm Kantar’s quarterly Entertainment On Demand survey, to be released on Wednesday, which looks at the dynamics of the video-on-demand sector.
Chris Hemsworth in Netflix’s Extraction 2. Netflix continues to have the highest household penetration in the Australian market.
Paramount+ and Foxtel’s Kayo and Binge grew their subscriber bases by more than 10 per cent year-on-year, being newer entrants to the market, while Netflix had the largest net decline in users both year-on-year and quarter-on-quarter.
Netflix’s user base was down 9 per cent in Australia across the past 12 months, according to the report, closely followed by Disney+, down 8 per cent, and Stan, down 6 per cent.
Stan is majority owned by Nine, the publisher of this masthead.
Local players Foxtel and Nine disclose subscriber figures for their streaming services on a quarterly and half-year basis, with Nine’s recent figures for Stan putting it at odds with Kantar’s report.
Stan has shown slight growth in its two most recent half-year financial results, despite the figures provided being somewhat vague. Subscribers were listed by Nine at 2.5 million in its FY22 half-year results, “above 2.5 million” in its FY22 report and “approaching 2.6 million” in its latest half-year report, released in February.
While the international streaming services do not publish subscriber numbers in Australia, both Netflix and Disney have been open about fluctuating subscriber figures lately. Disney reported 4.6 million fewer streaming customers in its last quarterly results in May, while Netflix reported growth of 1.07 million subscribers in the Asia-Pacific region in the second quarter of this year.
Andrew Northedge, consumer insights director at Kantar, says the main reason Australians are swapping between subscriptions is to cut costs. A secondary reason, he adds, has been an increasing trend to view a specific series or film. “Once they’ve watched the content, they jump to the next service.”
A report from international advertising group Dentsu last week supports Northedge’s claim, saying 50 per cent of Australians believe owning more than one streaming subscription is a “luxury” rather than a necessity.
“We know from a question we ask about impact of rising inflation on personal finances that around 60 per cent of households are either concerned or very concerned,” Northedge adds.
Kantar launched its first Entertainment on Demand study in March 2022, interviewing a longitudinal sample of 10,000 Australians quarterly, plus a boost of 1500 new subscribers each time. It says it is nationally representative of all Australian households by age, gender and region.
Despite the decline, Netflix continues to have the highest household penetration in the Australian market, followed in order by Amazon Prime Video, Disney+, Stan and Binge, according to Kantar.
Morningstar analyst Brian Han says Australians chopping and changing is not a surprise during a cost-of-living crisis, though it’s difficult to make judgments on only a few quarters of data.
“There’s definitely been a sentiment shift on streaming globally,” Han says. “It used to just be about subscribers and their growth.”
He says investors increasingly want to be shown how user bases are being monetised. “How are you monetising those? How much profit are you making from them and how much of those profits are you pissing away reinvesting in content?”
Han says Australia’s population of 26 million cannot sustain the number of streamers present in the market, pointing to inevitable consolidation in the next few years.
As a result of cost pressures, Northedge says, broadcast video-on-demand services are making gains. Broadcast video-on-demand services in Australia include 9Now, 7Plus, 10Play and ABC iView.
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