Over the last 12 months, the German subscription video on demand market has managed to grow household penetration by just +0.9% points, hitting 51.3% in the first quarter of 2022, according to Kantar’s “Entertainment on Demand” study in Germany. The average SVOD-enabled household holds 2.8 subscriptions, the same number as a year ago. This compares to SVOD penetration in Great Britain at 58%, 64% in Australia, and 86% in the United States. “Growth in Europe’s largest market by population has stalled. Even services like Amazon Prime Video, which have dominated the share of new subscriptions over the last year have seen subscriber numbers remain flat, as those leaving the service to counteract those joining. Disney+ is the only major SVOD service in Germany to claim significant growth over the last 12 months,” the report noted.
According to the investigation, between January to March 2022, the number of SVOD-enabled households that subscribed to at least one video service in Germany grew slightly to 21.3 million, up 135.000, quarter on quarter, representing 51% of households. Amazon Prime Video accounts for almost half of all new subscriptions in the quarter (49%). The study also revealed that 3.5% of households in Germany took out a new video streaming subscription in the first quarter of 2022. Furthermore, one third (35%) of SVOD subscriptions taken out in the quarter were by households who were new to the SVOD category, whilst 19% made a direct switch from one provider to another
● IS AVOD THE ANSWER?
In a market where the appetite to stack SVOD services is limited, can ad-supported services start to drive further subscription adoption? Kantar took the United States as an example, where ad-supported services drove rapid growth in the market, playing a key role in raising the level of average subscriptions per VOD-enabled household from 3.1 in Q1 2020 to 4.8 in Q1 2022.
Since the beginning of 2021, the proportion of the German population saying they “do not mind seeing ads on video streaming services if it makes them cheaper,” is up to 39% from 36% a year ago. “The real challenge for these services is to provide a compelling content offering to entice new subscribers in and offset the pain point of adverts,” Kantar says.
● HOW DO SERVICES TARGET LESS ENGAGED DEMOGRAPHICS?
Another route to potential future growth within the German market is through tapping into demographics with low SVOD penetration. 40% of the German population are aged 55+, yet only 30% of this age bracket have an SVOD subscription within the household. In comparison, 79% of Gen Z households and 76% of Millennial households have an SVOD subscription. “Content has been the driving factor behind subscription adoption previously and has formed the base of any new subscription that is considered. However, the older demographic is more discerning, looking beyond content when considering a streaming service. The challenge for SVOD services is to appeal to this older audience,” the study remarked.