Why volatility is becoming the defining challenge of video streaming services

When Netflix reported a loss of subscribers in North America for the first quarter of the year, it generated speculation that video streaming had peaked, and is beginning a downward trend. Antenna took inventory of their results and detailed which services those who canceled Netflix went on to join. But a more holistic look at the premium SVOD category shows that streaming growth continues, albeit with some challenges driven by a fickler consumer and an increasingly competitive market.

Antenna found that subscriptions in the premium SVOD category in the United States grew +4.0% quarter-over-quarter and +24.7% year-over-year, despite Netflix’s losses. While the quarterly growth rate is down from the torrid pace of the last five quarters, it is still growing at a rate consistent with recent history.

The growth in the first quarter of 2022 was largely driven by Peacock and Paramount+. Antenna data indicates these two services combined to add over 6.1 million subscribers in the United States, representing 80% of subscription growth for the category. Meanwhile, incumbents Netflix and Hulu continue to see their share of subscriptions fall. In addition, Antenna observes a similar dynamic taking place for Disney+, as its growth rate falls below that of the category as a whole.

However, the most important factor shaping the growth dynamic for the category is volatility. Antenna observed 37.4 million new premium SVOD subscriptions in Q1 2022. This number is consistent with the previous two quarters, but dramatically higher than previous history. To put it in perspective, in Q1 2019, Antenna saw 10.3 million new subscriptions in the category, which is a three-year CAGR of 54%.

The number of cancellations has grown even faster. In the first quarter of this year, Antenna observed just under 30 million cancellations in the category, 12% higher than any other quarter in history, and more than 4.5x the cancel volume of the same quarter three years prior - a 65% CAGR. “Managing that level of volatility - ten million cancellations every month - is a remarkable challenge, and is becoming the defining task of video streaming services,”  the report concluded.