In 2024, the SVOD sector saw a 10.2% year-over-year (YoY) increase in total subscriptions, marking a slowdown from the 18.8% YoY growth recorded in 2023, as reported by Antenna's “State of Subscriptions: Pricing and Packaging” report. The specialty SVOD segment outperformed the premium segment, growing by 15.8% YoY compared to the premium segment's 9.4% YoY growth. The company explained that the industry is transitioning from its rapid expansion phase to a more mature stage marked by stable growth, strategic pricing adjustments, and an increased focus on profitability.
Among the main streamers, Netflix added 7.3 million net new subscribers, primarily driven by its ad-supported tier and the introduction of paid sharing features. Peacock exhibited robust growth, with a 31.3% YoY increase in its subscriber base, making it the fastest-growing premium SVOD service. Max gained 3.3 million subscribers, benefiting from the absorption of Discovery+ content, which led to Discovery+ losing 1.3 million subscribers.
Managing subscriber churn is a significant challenge for SVOD providers. In 2024, the churn rate for premium SVOD services rose slightly from 4.4% in March 2023 to 5%. Specialty SVOD services maintained a steady churn rate of 7.8%. However, some services managed to improve their churn rates: Max reduced its churn from 7.3% to 6.3% over the year, while Netflix experienced a temporary churn spike to 3.0% due to iTunes billing changes but stabilized at 1.9% by Q1 2024.
Ad-supported tiers are gaining significant traction in the SVOD market. As of 2024, 38% of all SVOD subscriptions were to ad-supported tiers, reflecting a 7-percentage-point increase from 2023 and a 10-percentage-point increase from 2022. During Q4 2023 and Q1 2024, ad-supported plans accounted for more than half of all new subscriptions: 51% of new subscriptions in Q4 2023 were to ad-supported tiers, while 56% were to ad-supported tiers. Consumer preferences are also shifting towards ad-supported models. When offered a choice, 61% of consumers opted for ad-supported plans.
Bundling various streaming services is proving effective in reducing churn and adding value for subscribers. Bundles typically show 2-6 point improvements in churn rates compared to standalone services. By Q1 2024 Disney Bundle (Disney+, Hulu, ESPN+) had a churn rate 2-6 points lower than that of its individual services. Meanwhile Apple One (Apple TV+ and other Apple services) reduced the churn rate by 6 points compared to the standalone Apple TV+ service.
Price promotions, especially for annual plans, are crucial for attracting and retaining subscribers. These promotions often result in significant spikes in subscription uptake. For instance, Max's aggressive annual plan discounts in late 2022 led to a more than 5-fold increase in annual plan uptake.
Price increases, although risky, have generally resulted in positive outcomes for the SVOD industry. Over a series of 12 price hikes, the industry saw a net addition of 5.5 million subscribers within three months post-increase. This suggests that while price hikes might initially cause some cancellations, they often attract new subscribers looking for value or improved services.
The SVOD industry in 2024 is marked by a strategic focus on balancing growth with profitability. Ad-supported tiers, service bundling, price promotions, and annual plans are key strategies that streaming services are employing to attract and retain subscribers. As the market continues to evolve, SVOD providers must remain agile, responding to consumer preferences and competitive pressures to sustain their growth and meet the demands of a dynamic marketplace.