Subscriber growth rate across premium SVOD for the second quarter of 2022 was the lowest in the 22 quarters for which Antenna has data (+1.2% vs. Q1; compared to +7.4% just two quarters ago). It was also the lowest in absolute volume of net subscriber adds since the third quarter of 2018 (+2.5 million vs. Q1; compared to an average of +10.8 million subscriber adds per quarter over the previous six quarters).
Regarding platforms in particular, Paramount+ (+1.1 million), Apple TV+ (+1.0 million) and Discovery+ (+0.8 million) did still manage significant net subscriber growth. However, even those three services slowed down significantly, growing a collective 7% in the second quarter in comparison to 13% last quarter.
According to Antenna, there might be a seasonal factor at play, as the second quarter was also the slowest growth period of 2021, although there has never been a slowdown like this one. Interestingly, increased cancels were not the culprit for the growth slowdown: they remained consistent from last quarter, at -28.5 million. Instead, the growth slowdown was driven by a big drop in new sign-ups, as gross adds were down more than 18% from the previous quarter.
While Netflix’s challenging second quarter has been well-documented, one bright spot is that its performance did improve over the course of the quarter. April was the worst churn month that Antenna has ever observed for Netflix, at 3.8%. To put that in perspective, its highest churn month in 2021 was 2.3% (January). But Antenna observed their churn drop to 3.7% in May, and to 3.3% in June. Further, Q2 was Netflix’s biggest gross adds quarter in two years, with +3.2 million. This uptick in new demand was likely driven in part by tentpole releases, such as the fourth season of “Stranger Things,” whose rollout was partitioned across May and July.
● SVOD REVENUES IN THE UNITED STATES
According to Digital TV Research, despite being the world’s most mature market, SVOD revenues in the United States will grow by US$14 billion from US$43 billion in 2021 to US$56 billion in 2024. However, growth will be almost flat from 2024 to 2027 due to price competition and lower ARPUs from Netflix’s hybrid AVOD-SVOD tier.
“Netflix will remain the SVOD revenue winner. However, the platform will lose US$1.4 billion in SVOD revenues between 2022 and 2027 due to lower ARPUs from 2023. Netflix will more than recoup these SVOD revenue losses with AVOD sales,” commented Simon Murray, Principal Analyst at Digital TV Research.