USA: SVOD subscriptions are heading into a new era

Boom times are over for SVOD, according to Antenna's latest report, "Q1' 24 State of Subscriptions Report: Premium SVOD". The report revealed that the industry has seen a slowdown in growth, though it is not an issue with acquisition. The company measured 164.7M gross additions in 2023, an increase of 19.3M compared to 2022. But while gross additions are up, so too is the churn rate. Churn in the premium SVOD category has increased considerably over the past four years, placing even more pressure on growth. In 2023, Antenna measured 36.2M cancellations more than the previous year, translating to 17M fewer net additions. This means that streaming services are having to work harder for smaller subscriber gains.

Seeing these numbers, Antenna explained: "We believe the streaming video industry is entering a new phase. Previously, the industry was hyper-focus on acquisition as streaming services looked to establish a mass audience. But now that the largest players have scale, they have to shift their focus to more advanced subscriber management."

Growth has moderated, churn has increased, and services are working harder for smaller gains. In this context, Antenna identified three areas of focus for 2024: "resubscribe/win-backs," "tenure," and "serial churn."

Regarding subscriptions, 30% of premium SVOD gross additions in 2023 were resubscribed, meaning these users were previously subscribed to and had since canceled that same service within the prior 12 months. Apple TV+ saw the highest instance of resubscribing at 37.2%, and Netflix's resubscribe rate fell from 35.2% to 26.0%, driven by the password crackdown, which led to many first-time sign-ups by individuals who had previously used the service through another person's account. According to Antenna, the rate at which users resubscribe is increasing.

Nearly a quarter of cancellations are "won-back" within three months, and over 40% within 12 months. Peacock and Netflix saw the steepest win-back curve for this cohort, with 30% of cancels resubscribing by month 3. By month 12, 50% of Peacock and 46% of Netflix cancels were "won-back." Antenna explained that these should be a primary component of acquisition strategies.

A significant portion of premium SVOD subscriptions are in their first year of tenure. 39% of premium SVOD subscriptions are in their first year of tenure. 45% of premium SVOD subscriptions (excluding Netflix) are in their first year of tenure. 69% of premium SVOD subscriptions (excluding Netflix) are between years 1 and 2 of tenure. Furthermore, about half of year-one subscriptions are in the first three months of tenure, when a subscriber is most at risk of canceling.

Antenna defines serial churners as individuals who have three or more cancellations of a premium SVOD service in the past two years. That segment now makes up nearly a quarter of individuals. The behavioral difference between these cohorts is striking, and they should be managed differently. 123.8M users transact with premium SVOD, with 7.0M entering the category in 2023. Serial Churners represent 23% of subscribers, up from 17% last year and 3% in 2019.

Antenna explained that survival rates for serial churners are significantly lower than for non-serial churners. Heavier serial churners are the least likely to retain after joining a service. By month 3, 38% of nonserial churners, 46% of standard serial churners, 53% of heavy serial churners, and 62% of super-heavy serial churners were canceled. By month 12, 67% of nonserial churners, 75% of standard serial churners, 80% of heavy churners, and 86% of super-heavy churners were canceled.