Streaming strategies pivot as U.S. reaches near total saturation, Kantar reports

As the U.S. streaming market approaches near-total saturation, with 95% of American households (123 million) subscribing to at least one service, the industry is witnessing a significant shift in strategy.

Recent data from Kantar’s Entertainment on Demand (EoD) study highlights this evolution, revealing a notable change in consumer priorities. No longer driven primarily by the allure of specific titles, customers are increasingly valuing “money for value” when choosing streaming services.

The study, conducted from October to December 2023, illustrates several key trends in the U.S. streaming landscape:

• Over half of U.S. households now use a Free Ad-Supported Streaming Television (FAST) service weekly, making it the fastest-growing streaming category. However, the growth of both FAST and Ad-supported Video on Demand (AVoD) slowed in the fourth quarter of 2023, despite attractive Cyber Monday promotions.
• Apple TV+, ESPN+, and Prime Video experienced the most significant absolute growth in subscriber share among paid Video on Demand (VoD) competitors. This growth was facilitated by a combination of promotions, trial offers, and holiday spending.
• The resolution of writers’ and actors’ strikes positively influenced customer perceptions of content quality.
• An increase in new content and variety was a more significant factor for sign-ups in the fourth quarter compared to the third quarter.
• Popular titles like ‘Yellowstone’ on Peacock, ‘Virgin River’ on Netflix, and ‘Loki’ on Disney+ topped the viewership charts.
• Netflix remains the primary platform for content discovery, but Hulu and Max have increased their market shares, ranking third and fourth, respectively.

With most U.S. households already subscribed to a service, streaming platforms are reevaluating their strategies to maintain and expand their user base. The focus is shifting from merely offering the latest titles to adding value to their services. This is crucial in preventing subscriber churn, especially in light of recent price hikes.

One practical approach to enhance value is allowing the creation of multiple profiles within a single account. This feature, aimed at engaging multiple household members, has led to a 13% increase in paid subscriptions compared to the previous quarter.

Additionally, diversifying content offerings is proving to be a valuable strategy. Services like Prime Video, Peacock, and Max now incorporate live content such as news and sports into their portfolios. Subscribers have expressed increased satisfaction with sports and live news offerings over the last six months. This trend is expected to continue, especially with the upcoming Summer Olympics later this year.

The concept of brand ecosystems is also playing a significant role in providing convenience and value to subscribers.

Subscribing to other services as channel add-ons, such as Paramount+ on Apple TV+ or Max on Prime Video, simplifies the user experience. These add-ons accounted for 23% of all streaming services in the fourth quarter of 2023, up from 20% in the previous quarter. The integration of streaming services into broader brand ecosystems, like Prime Video benefitting from Prime Shipping and Apple TV+ leveraging iPhone sales, has also contributed positively to the brand health of these streaming services.

Advertisement

“Subscriber perception of both importance and value are key indicators of future churn and retention. Brands must dive deep into subscriber data to unveil the true meaning of these concepts and inform strategic changes that improve retention. Value and importance are dynamic, so brands must grasp how streamers interact with and perceive their offerings – it’s imperative for futureproofing amid streaming wars. This means understanding factors like content library depth, personalization features, and user experience fluidity, and informing future steps like diversifying content, optimizing algorithms, and offering flexible subscription tiers,” said Hannah Avery of Kantar.