The SVOD market in the United States has seen significant growth over the past several years. According to Ampere's research, market penetration increased from 51% of households in 2016 to 75% in 2023, a notable 24 percentage point rise. This growth is expected to continue, reaching an estimated 83% by 2028 as the market approaches saturation. Despite this increasing penetration, the average number of SVOD services per household, known as the stacking rate, has plateaued at 4.4 services since 2021. This indicates that while more households are adopting SVOD services, they are not necessarily increasing the number of services they subscribe to.
The SVOD industry's content spend peaked at $36.2 billion in 2022, driven by a surge in investments in original programming. However, in 2023, both original and acquired content spending remained flat, influenced by the Writers Guild of America (WGA) and Screen Actors Guild‐American Federation of Television and Radio Artists (SAG-AFTRA) strikes. As a result, the forecast for content spending over the next few years suggests slower growth as platforms shift their focus from aggressive subscriber acquisition to achieving profitability.
One of the most striking findings from Ampere's research is the rise in resubscription behavior. Nearly half (47%) of all SVOD sign-ups in Q1 2024 were from resubscribers, a significant increase from 27% three years prior in Q1 2021. This trend is particularly pronounced among younger demographics, with 42% of U.S. consumers aged 18-44 frequently canceling and resubscribing to services. This behavior highlights the fluid nature of the SVOD market, where consumers are not only exploring different services but also returning to previous subscriptions based on changing preferences and content availability.
Resubscribers exhibit different behaviors depending on the platform they use. For instance, Netflix resubscribers typically stack an additional 2.3 services, leading to a total of 3.3 services. In contrast, Amazon Prime Video resubscribers average 1.5 extra subscriptions, while Hulu resubscribers have a higher stacking rate, averaging 3.1 services. These variations suggest that each platform's content strategy and user experience significantly influence how subscribers interact with multiple SVOD services.
Resubscribers are predominantly younger, with notable percentages in the 18-24 (15%), 25-34 (22%), and 35-44 (22%) age brackets. Additionally, 46% of resubscribers live in households with children, compared to 39% of the general SVOD user base. This indicates that family-friendly content and services tailored to younger audiences are crucial for retaining these subscribers. The higher presence of resubscribers in households with children underscores the importance of children's programming and family-oriented content in reducing churn.
Interestingly, resubscribers tend to report higher customer satisfaction levels, as measured by the Net Promoter Score (NPS), compared to the average subscriber. This suggests that factors other than dissatisfaction, such as pricing strategies and content availability, drive their resubscription behavior. This insight highlights the need for SVOD services to focus on competitive pricing and robust content offerings to maintain customer loyalty.
Given these findings, several strategies emerge for SVOD services to enhance customer retention and engagement. Firstly, adjusting pricing models and focusing on popular and returning TV seasons can help retain subscribers by meeting their content expectations. Secondly, investing in children's programming and family-friendly content is vital, considering the high percentage of resubscribers in family households. Additionally, offering bundling options and ad-supported tiers can provide more flexible and affordable choices for consumers, potentially mitigating resubscription behavior. By leveraging these insights, SVOD platforms can better navigate the challenges of a saturated market, optimizing the lifetime value of their subscriber base and ensuring sustained growth and profitability.
